South Korea is gradually emerging as a powerhouse in the international e-commerce market and according to the existing forecasts, the CAGR for the industry is a whopping 7%. oncology to increase by 8% from 2024 to 2028. This growth is expected to take the market to a fantastic KRW222. GlobalData, an industry analysis specialist, expects that the industry will total $170. 1 billion or 1 trillion by 2028.
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South Korea: What Makes Asia-Pacific as the E-commerce Giant
GlobalData’s E-Commerce Analytics further notes that as of now, South Korea’s e-commerce market has been ranked as the fourth largest in the Asia-Pacific region with Japan, China, and India being leading the market. This is because, between 2020 and 2023, the market had a strong growth rate of 12% Compound Annual Growth Rate. 6%, reaching KRW149. $ 12.25 trillion or one trillion in 2023. This positive trend is expected to sustain in the future and in the year 2024 there is a predicted 10. 2% increase to advance its sales to KRW164. Nearly 3 trillion ($125.8 billion).
Growth Drivers Impacting the Development of E-commerce in South Korea
Shivani Gupta, the Senior Banking and Payments Analyst at GlobalData, evaluates the fact that the South Korean market is supported by several factors such as high-speed internet connectivity, safe online payments, and the increase of consumer confidence in the e-commerce industry. It has also witnessed rapid progress in digital retail including the use of drones and robots in deliveries, the use of Artificial Intelligence, and live stream e-commerce.
Global Companies Test the Waters of South Korea’s E-commerce Market
As most of the consumers’ spending goes into high fashion, global players have begun to target the South Korean market. For instance, Shein, a Chinese fashion e-commerce platform recently established a South Korea-focused online platform in mid-June, 2024.
Sustainable Possibilities Fostering Full-blown E-tail Consumption
South Korean e-commerce firms are also exploring new ways such as live streaming to capture a wider client base. In June of 2023, the world’s first YouTube Shopping, a specific category of online shopping in South Korea was launched, where products are displayed live in Korean.
Also, for better e-commerce profits, YouTube collaborated with Coupang an e-commerce giant, on the Shopping affiliate program in June 2024. This feature allows the YouTubers to annotate any products from the affiliated brands or the shopping websites in the videos. In this way, if the viewer goes to these tags and buys a product, the creators earn money via commission.
Payment Methods: A Change in Perception of Moving to Digital Products
In 2023, the type of payment that was most popular for e-commerce in South Korea was the payment cards where the figure stood at 54%. According to GlobalData’s 2023 Financial Services Consumer Survey market share of the company has remained at 3%. Of these, credit and charge cards were especially preferred having a market share of 48. 5% market share. This preference is due to other incentives that usually come with the products such as interest-free installments, reward programs, cash-back programs, and discounts among others.
Alternative payment methods are also on the rise having 32 percent representation, this payment method includes paying through a third party. business is to attain a nine percent market share during the year 2023. Some of the common mobile payment systems include; Samsung Pay, Naver Pay, and China Union Pay because of their security, convenience, and the comfort they afford to the users. However, physical cash generated only about 2% of the e-commerce payment suggesting the nation’s healthy inclination towards digital payment systems.
E-commerce South Korea Market Analysis
Shivani Gupta opines that the e-commerce market in South Korea will experience high growth in the future years. Such factors include a shift toward online purchasing, developments in payment systems, the emergence of new payment methods, and increased attention to experimental purchasing methods like live streaming.
Conclusion
The South Korean e-commerce market is already transitioning into its growth phase and is set to reach over $170 billion by 2028. Such a development is backed by a strong internet network, efficient payment systems, and modern approaches to shopping. This accounts for the reason why South Korea expects to be listed among the premier e-commerce markets worldwide as international brands keep flooding the market and consumers shift to the use of digital products in payment.
