SOUTH KOREA10 eCommerce Facts

According to a 2013 report by A.T. Kearney, South Korea ranks as the 5th most attractive market for eCommerce globally and 3rd within Asia. South Korea's eCommerce market offers considerable

promise for new brands to reach the 2nd most connected population in the world (ICT Development Index, 2013). In Q2 2013, South Korea had the world's fastest internet, which when combined with their consumers’ willingness to embrace new technology, has resulted in the country ranking 2nd globally in smartphone penetration rates (Statista, 2013). Consumers are also open to using their

credit cards online, with an estimate that over 75% of all internet users had made a purchasevia the web by 2014 (Google Consumer Barometer Report, 2014). South Korea also sees

social commerce trending amongst younger users while cross border transactionsgrew to 47% in 2013, proving South Korea is a significant opportunity

for eCommerce players.

AIP Corporation, Alexa, A.T. Kearney, Bank of Korea, BBC, Borderfree, DHL, Ekos Global, eMarketer, Euromonitor, Forrester, Google Customer Barometer, ICT Development Index, Internet World Stats, Korean Custom Service, Malltail, Market Insight, Payvision, Pitney Bowes, Statista, The Daily – L2, The Payers, yStats.

SOURCES:

SOUTH KOREA'S ECOMMERCE GROWTH POTENTIALTotal eCommerce spend in South Korea is forecast to hit USD $25.3 billion in 2017, a 33% rise from 2013, according to eMarketer in 2014. Online sales made up 13% of the total retail spend, with an additional 2% coming from mobile commerce. This led to the eCommerce marketplace growing by 9.3% to reach an estimated 25.4 million online shoppers and is expected to grow to 75% by 2015 (Euromonitor, 2013).

Online Retail Sales (USD $ billion)

2013 2014 2015 2016 2017

$19.0 $20.8 $22.3 $24.4 $25.3

ONE OF THE WORLD’S MOST CONNECTED COUNTRIESAccording to Internet World Stats, South Korea had 41.6 million internet users in December 2013. Internet World Stats also reported that 84% of Korean households had broadband internet. Google’s Connected Consumer Survey 2014 indicated that each South Korean uses an average of 2.3 devices and is online daily, spending 14.7 hours online each week.

SMARTPHONE USAGE IS DRIVING MOBILE COMMERCEAccording to a 2013 Statista report, South Korea ranks 2nd in the world for smartphone penetration. In 2013, yStats reported that there were more online purchases made with smartphones than laptops. Nielsen also reported that in terms of mCommerce activities, South Korea led at 67%, compared to other markets such as Singapore (31%), Hong Kong (28%), Malaysia (27%), Australia (25%), India (8%), Thailand (7%), Indonesia (7%) and the Philippines (3%). Google’s Connected Consumer Survey 2014 revealed that smartphones were the most used device by South Koreans. The same study found that 44% of shoppers used their smartphone during their last purchase. In 2014, total mobile penetration reached 106%, 70% of which was via smartphones.

Mobile Commerce Activity (2013)THE ROLE OF SOCIAL MEDIAIn 2013, almost 70%, or 26.6 million, of South Korean internet users were active on social media. The use of social networks grew by 7.4% in 2013, with Facebook use growing by 9.3% to reach a 75% penetration rate. Social commerce is a trend being quickly adopted by younger shoppers, who represent the largest proportion of digital shoppers in South Korea. Statista found that 81.2% of 20 - 29 year olds purchased products online in 2013, while 20% of internet users in this demographic used social media to shop online, according yStats in 2013. In 2014, BBC reported that KakaoTalk was Korea’s No. 1 social networking app; 35 million of the country's 50 million were users.

Internet users were active on Social Media

70%made last purchasefor clothing andfootwear online

75%

PRODUCT SEGMENTS FOR ONLINE PURCHASES As of 2013, the preferred products for South Korean online consumers were cosmetics, clothing and consumer electronics. According to Google’s 2014 Consumer Barometer Report, 75% of South Koreans made their last purchase for clothing and footwear online, which is one of the highest rates in the world.

KEY ECOMMERCE PLAYERS IN SOUTH KOREASouth Korea’s eCommerce space is comprised of several local sites, with international retailers gaining popularity as well. In 2009, eBay led the pack after acquiring local marketplaces Auction and Gmarket. Groupon followed in 2013 with the closing of their local operations and opted instead to buy Ticket Monster. While not a direct eCommerce retailer, Naver Shopping (Google’s equivalent in Korea) is also a key site for facilitating eCommerce activity, as it consolidates all product reviews and offers price comparisons for consumers and paid search options to retailers.

Key eCommerce Players

Preference forInternational Sites (2014)

SOUTH KOREANS PREFER TO CARD ITA 2013 Forrester Report found that in 2012, South Korean shoppers made an average of 147 purchases with their credit cards. This far exceeds the US, with only 83.5 average transactions. Online retailers in South Korea need to accept local credit cards, as less than 20% of online shoppers have international versions (Market Insights, 2013). In 2013, a study by Payvision found that 73.6% of South Koreans preferred making payments with a credit card while alternative methods like direct bank transfer and mobile payments accounted for 40% of all eCommerce transactions.

Payment Preferences (2013)

THE SOUTH KOREAN SHOPPERAccording to a survey by AIP Corporation in 2013, 50% of female South Korean internet shoppers shopped online once a week or more. Borderfree reported in 2013 that South Korean shoppers are 'night owls' and prefer to shop from 10pm to midnight. Order volumes are distributed evenly throughout each week, with a slight increase on Wednesdays. In 2014, the projected online spend per shopper was USD $1,050. South Korean shoppers also have a strong affinity for discounts and promotions; 66% rated “Favourable price and promotions” as their primary criteria when selecting a vendor in 2014.

SOUTH KOREAN SHOPPERS EXPECT SAME DAY DELIVERIES88% of South Korean’s expect goods to be delivered to their door and will wait a maximum of 3.9 days, compared to the global 6.5 day average. In 2013, an estimated 1.5 billion packages were sent door-to-door by courier service providers. Same day delivery is a common option for eCommerce stores, with major players like Coupang offering free delivery within two days.

GROWING CROSS BORDER COMMERCEIn 2013, total South Korean imports from eCommerce transactions grew by 47% to almost USD $1 billion. As of May 2014, 74% of South Koreans who shopped abroad used American sites, followed by 11% who shopped on Chinese sites, according to the Korean Customs Service. Comparing Q1 2013 to Q1 2014, there was a 170% increase in eCommerce purchases from China, according to local delivery agency Malltail.

No.1Social

NetworkingApp

Expect door-to-door

delivery

88% I ♥ same daydelivery

1

3

5

7

9

2

4

6

8

10

Hours weekly14.7

41.6Million

internet users

On broadband 84%

Devicesper person

2.3

15%

68.2%

50.1%

15.9%

46.4%

30.6%

30.5%

21%

5%

12.8%

18.3%

20.2%

11.7%

Cosmetics

Clothing, footwear,sporting goods or accessories

Bookings

Computer equipment

Video

Music products(incl. streaming)

Other paid content(work/school-related content)

Home electronic appliances

Computer or video games

Books, magazines or newspapers

Food, groceries(incl. health foods)

Toys or furniture

Computer software(excl. games)

Popular Product Categories (2013)

Shopped onlineonce a week

or more

50%SALE!

Buying onChinese sites

11%

Buying onUS sites

74%

12 3

67%

Web portal that offers email, forums, messaging service,

news and shopping

Local general products retailer (owned by eBay)

Local general productsretailer

Local general products retailer (owned by eBay)

Local general products retailer and internet advertiser

Multinational food and shopping corporation

Local general productsretailer

Local ticket and daily deal eCommerce company

Leading web portal that offers price comparisons and product reviews

$ Alternative Payments

Credit cards73.6%

Online Payments

Direct bank transfer and mobile payments 40%

South Korea 10 eCommerce Facts© 2015 Singapore Post Limited. All Rights Reserved.For more information, visit www.specommerce.com/knowledge-centre