Want to gain insights on South Korea's business trends? We've got you covered. If you're thinking about business expansion in South Korea, then you've got to look into the country's economic growth, consumer behavior, and marketing statistics. You've got to look not only on present numbers, but also on the past ones. This will let you recognize patterns and predict future market growth. In this article, we've compiled the ecommerce trends in Korea for year 2020.
South Korea is one of the biggest ecommerce markets worldwide. With sites like NAVER Shopping, Coupang, eBay Korea, Wemakeprice and TMON, Koreans have more choices and reasons than ever shop online. According to statistics in 2022, about 39 million South Korean internet users purchase products or services online per year. After looking at the 2020 data, you'll see how much these numbers have grown, and gain insight on how much it might grow in the coming years.
As a consumerist nation with an internet usage rate of about 97%, Koreans are most likely to turn to the internet to search about, discover, and purchase an item or service that they are seeking. Different industries have already transitioned to ecommerce platforms to gain more sales. Keep reading to learn about Korea's domestic ecommerce trends, as well as the growing number of transactions on foreign markets for Korean products.
South Korea Ecommerce Trends 2020 ⬇️
1. Online Shopping Transaction Value in Korea
Let's take a closer look at the impact of the COVID-19 pandemic on South Korea's economy. Last year was tough for many industries, especially for culture and leisure services and travel arrangement and transportation services, which saw a significant decline in transaction value by 69.3% and 53.3% respectively.
But not all categories suffered the same fate. Online shopping, for one, saw a remarkable increase in transaction value. People were more reliant on the internet to purchase necessities like food, household goods, and even cosmetics and clothing items. In fact, the transaction value of food services saw a massive 78.6% increase, while food and beverages and household goods also experienced an uptick of 48.3% and 44.1% respectively.
So, what were the top three categories that took the largest share of online shopping transaction value? Drumroll please... food and beverages took the top spot with 12.4%, followed closely by home electronics and telecommunication equipment with 11.8%, and food services at 10.8%.
It's evident that the pandemic has had a significant impact on people's spending habits. While they cut back on travel and leisure, they still managed to prioritize their daily essentials, resulting in an increased reliance on online shopping. It's a testament to how adaptable we can be in times of crisis, and hopefully, we'll continue to see growth in these areas as we move forward.
2. International Online Shopping on Korean Sites
In the fourth quarter of 2020, there were some significant changes in online sales trends that caught our attention.
Firstly, the Korean site online sales to foreign users decreased by 18.2% to 1.5 trillion KRW. On the other hand, Korean user purchases from foreign sites increased by a whopping 25.9% to 1.2 trillion KRW.
Now, what could be the reason behind these shifts in online sales figures? Well, it turns out that the decrease in Korean site online sales to foreign users was mostly due to a sharp drop in online sales of Duty Free sites. These sites usually cater to tourists, and since travel was severely impacted due to the pandemic, it's no surprise that sales took a hit.
However, Korean users purchasing from foreign sites saw a surge, indicating that people were still keen on buying products from overseas. Perhaps the allure of exotic products and unique deals from foreign e-commerce sites was too hard to resist.
Online overseas direct sales amounted to 5.96 billion won in 2020, down 0.6% from the previous year. Online overseas direct sales compared to the previous year increased in China (0.9%) and the US (20.5%), but decreased in ASEAN (-31.4%) and Japan (-13.6%).
Records, videos, and musical instruments increased (132.2%) in 2020, compared to the previous year. Cosmetics also increased slightly (1.1%), but clothing and fashion-related products (-32.4%), home appliances, electronics, and communication equipment (-41.4%), food and beverages (-40.7%) saw a decrease compared to the previous year.
3. Korean User Purchases from Foreign Sites
According to the latest report, the amount of online overseas direct purchases by country increased for every country, which is a testament to how global e-commerce is becoming more accessible and user-friendly. The data shows that Korean users are broadening their horizons and venturing into new markets for their online shopping needs.
So, which countries were the top performers in this report? Well, drumroll please... the US, the European Union, and China took the top three spots, with 3.5%, 21.7%, and 24.4% respectively.
It appears that Korean users have been indulging in some retail therapy from foreign sites, and most categories saw an increase in purchases in 2020 compared to the previous year.
So, what's been hot on the shopping lists of Korean users? Well, it seems like they've been keeping their stomachs satisfied with a 22.5% increase in food and beverage products. Who doesn't love trying out new snacks and exotic ingredients from around the world, right?
And it's not just food that's been on the rise. Clothing and fashion-related products also saw an increase of 11.8%. It looks like Korean fashionistas have been scouring the internet for the latest trends and unique pieces that they can't find in their local stores.
But that's not all - household goods and automotive supplies also saw a significant increase of 34.6%. It seems like Korean users are getting handy around the house and sprucing up their cars with the latest gadgets and accessories.
In Korea, online retail transactions became as common, if not more, than physically going into a store and purchasing products. The South Korean nation is a tech-savvy one, with 98% of its population being internet users. Their technology, added with the restraints of COVID-19, influenced their online purchasing behavior. For this reason, the ecommerce industry grew in year 2020, and has continued to grow today in 2023.
A good market research looks into past, present, and future numbers. We hope you gained some business insights and intelligence in the data above.
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