Austrade has released an e-commerce guide to help Australian businesses gain access to Korea’s burgeoning e-commerce marketplace and increase pathways to market for Australian exporters.
Titled E-commerce in Korea: A Guide for Australian Business – the first in a series of country specific publications being developed by Austrade – it provides detailed information on Korea’s e-marketplaces and tips on how to access the increasingly savvy Korean consumer.
Amanda Hodges, Austrade’s Seoul-based Senior Trade Commissioner for Korea and Mongolia, said Korea’s e-commerce market is predicted to hit US$50 billion this year, making it the third largest in the Asia-Pacific, after China and Japan.
“The Korean e-commerce market is growing at a rate of 15 per cent every year,” said Ms Hodges.
“A combination of high 4G penetration and smartphone ownership of nearly 91 per cent of Korean’s population of 50 million people, has assisted internet retailing to become a way of life in Korea. Close to 65 per cent of internet users are shopping online – the second highest percentage of online shoppers in the Asia-Pacific region.
“Korean consumers are shopping across borders to look for deals and hard-to-find items, food and beverages (excluding alcohol), apparel, consumer electronics and beauty and personal care items.”
Global technology leader
Fuelling this growth is Korea’s new e-commerce applications, platforms and payment solutions which are making it easier to engage in e-commerce.
This is further enhanced as Korea is a global technology leader with a tradition of robust investment in sophisticated technology. It has also opened opportunities for Australian companies specialised in fintech solutions.
According to Statistics Korea, over 99 per cent of Koreans aged 10-30 years use the internet, while consumers aged 40-60 years – who make up 80 per cent of the population –are heavy internet users.
Smartphone purchases are also booming as a growing number of consumers are spending more using their mobile devices.
About 54.2 per cent of online shopping transactions were made from mobile phones, with one-third of smartphone users making a purchase with their phone at least once a week.
Online shopping websites
These mobile-driven transactions accounted for 53.5 per cent of total internet retail sales in 2016 and were worth US$31.7 billion (KRW35.5 trillion), a 41.9 per cent increase compared to 2015.
Ms Hodges noted five types of online shopping websites in Korea are also fuelling the growth in online transactions.
These include department store chain websites such as Lotte, Hyundai, Shinsegae and AK; hypermarket websites; TV home shopping channels; social commerce shopping platforms; and open market platforms.
“eBay Korea owns the two biggest internet retailers in Korea – Gmarket and Auction – and held a 22 per cent market share in 2016. While SK Planet’s ‘11 Street’ shopping website is the second biggest online retailer, with nine per cent market share, and Lotte Shopping and Coupang ranked third and fourth,” said Ms Hodges.
Top items bought by Korean consumers
Eight countries accounted for 99 per cent of cross-border online trade: the US, China, Germany, Hong Kong, Japan, the UK, France and New Zealand. However, Australia only accounted for approximately 0.4 per cent of cross-border online sales in 2016.
For cross-border online shopping, top items purchased by Korean consumers from Australia included beauty and personal care items, fashion and health supplements.
Ms Hodges said the landmark Korea-Australia Free Trade Agreement (KAFTA), once fully implemented, will also allow 99.8 per cent of Australia’s highly regarded goods tariff-free entry to Korea.
“This is why we encourage Australian business to take a closer look at the opportunities Korea’s e-commerce platforms provide and utilise them as they represent an innovative pathway to enter the market.”
Contact Austrade Seoul to learn more about accessing the e-commerce opportunities.