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South Korea's Online Retail Surge

General Report November 7, 2024
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TABLE OF CONTENTS

  1. Summary
  2. Current State of Online Retail in South Korea
  3. Market Forecast and Trends (2024-2028)
  4. Analysis of Key Product Categories
  5. Conclusion

1. Summary

  • South Korea's online retail market, led by prominent players like Coupang, Naver, and Gmarket, is experiencing substantial growth. With a total market value of $124.7 billion in 2023, the sector reflects a 5.2% increase from the previous year, making up 31.8% of the country's total retail sales. Coupang dominates the market with a 39.7% share, followed by Naver and Gmarket, which collectively hold 67.4% market share. A significant trend is the rise of mobile commerce, accounting for 70.3% of online sales, with smartphones facilitating 70% of all online transactions. This mobile dominance is evident in categories like pet products and fashion. The report forecasts continued market expansion, with live commerce expected to reach 6% market share by 2028, illustrating shifting consumer behavior and retail dynamics.

2. Current State of Online Retail in South Korea

  • 2-1. Overview of Online Retail Sales

  • In 2023, the online retail market in South Korea reached $124.7 billion, marking a growth of 5.2% from the previous year. This figure represents 31.8% of total retail sales in the country. The online retail sector is projected to continue its growth trend, with the overall retail market expected to grow at a CAGR of 3.2% from 2023 to 2028.

  • 2-2. Market Share Distribution Among Major Players

  • In 2023, the top three players in the South Korean online retail market were Coupang, Naver, and Gmarket. Together, they accounted for 67.4% of the market share, with Coupang leading at 39.7%, followed by Naver and Gmarket. Coupang's strong brand presence and customer-centric services have bolstered its market position. Naver capitalizes on its search capabilities, while Gmarket offers a diverse product range and competitive pricing.

  • 2-3. Growth of Mobile Commerce

  • Mobile commerce has become a dominating force in South Korea's online retail landscape, accounting for 70.3% of all online retail sales. Smartphones are the preferred devices for online shopping, responsible for 70% of total online retail transactions. The categories showing the highest share of mobile commerce include pet products (81.9%), goods for infants and children (81.7%), and fashion & accessories (77.4%).

  • 2-4. Consumer Preferences in Online Shopping

  • Consumer preferences in South Korea reflect a significant trend towards mobile devices for online shopping, as evidenced by the 70% usage of smartphones in online transactions. The expected growth of live commerce is also noteworthy, with analysts projecting its market share to reach 6% by 2028. This trend indicates an evolving consumer behavior landscape that prioritizes convenience and accessibility in online retail.

3. Market Forecast and Trends (2024-2028)

  • 3-1. Projected Growth of Online Retail

  • The online retail market in South Korea is projected to continue its robust growth. It is expected to reach $460.1 billion by 2028, increasing from $392.4 billion in 2023. This signifies a compound annual growth rate (CAGR) of 3.2% from 2023 to 2028.

  • 3-2. Live Commerce Market Projections

  • The share of live commerce within the online retail space is anticipated to reach 6% by 2028. This indicates an increasing reliance on live streaming as a sales channel, which is expected to emerge as a significant segment of the online retail market.

  • 3-3. CAGR Analysis of Retail Market

  • The overall retail market in South Korea is expected to experience a growth of 3.2% CAGR between 2023 and 2028, reflecting steady market performance. In contrast, the online retail segment demonstrated a more vigorous growth of 5.2% in 2023 alone.

  • 3-4. Future Trends in Consumer Behavior

  • Mobile commerce plays a crucial role in consumer behavior, accounting for 70.3% of online retail sales in South Korea. The preferred device for online shopping is smartphones, comprising 70% of total online retail transactions. Categories with notably high mobile commerce shares include pet products (81.9%), goods for infants and children (81.7%), and fashion & accessories (77.4%).

4. Analysis of Key Product Categories

  • 4-1. Performance of Mobile Commerce by Category

  • In South Korea, mobile commerce significantly influences the online retail landscape, accounting for 70.3% of online retail sales. Among various categories, pet products have the highest share of mobile commerce at 81.9%, followed closely by goods for infants and children at 81.7%, and fashion & accessories at 77.4%. These figures illustrate the strong preference for mobile devices, primarily smartphones, among South Korean online shoppers, with smartphones being the preferred device for 70% of online retail transactions.

  • 4-2. Top Product Categories in Online Retail

  • As of 2023, Coupang leads the South Korean online retail market with a market share of 39.7%. It is followed by Naver and Gmarket, which have established themselves as significant players, together accounting for a total of 67.4% of the market share. Coupang's success is attributed to its strong brand presence and customer-centric services, while Naver capitalizes on its robust search capabilities, and Gmarket is known for its diverse product offerings and competitive pricing.

  • 4-3. Consumer Spending Trends in Online Shopping

  • The online retail market in South Korea recorded a growth of 5.2% in 2023, reaching a total value of $124.7 billion. This accounted for 31.8% of the overall retail sales in the country. The market is projected to continue its upward trend, with expectations of growth fueled by evolving consumer preferences and the increasing adoption of online shopping platforms.

Conclusion

  • The South Korean online retail market is poised for continued growth through 2028, largely driven by key players such as Coupang, Naver, and Gmarket. Coupang's strong brand loyalty and customer-focused services give it a competitive edge, while Naver's search capabilities and Gmarket's diverse inventory and pricing strategies position them as formidable competitors. The report emphasizes the rising importance of mobile commerce and live commerce, highlighting their significant roles in shaping consumer behavior and retail trends. However, market performance may witness variations due to unpredictable economic changes, underscoring the need for ongoing trend analysis. Retailers seeking to gain or maintain market share must adapt to these evolving trends and leverage digital innovations. Looking ahead, exploring new technologies and enhancing customer engagement strategies could provide practical applications for sustaining this momentum and addressing the market's dynamic nature.

Glossary

  • Coupang [Company]: Coupang is the leading player in the South Korean online retail market, holding a significant market share of 39.7%. Its success is attributed to its strong brand presence and customer-centric services, making it a critical entity in the analysis of South Korea's retail dynamics.
  • Naver [Company]: Naver plays a crucial role in the South Korean online retail market, leveraging its search capabilities to enhance customer experience. It is recognized as the second-largest player, contributing to the competitive landscape of online retail.
  • Gmarket [Company]: Gmarket, known for offering diverse products and competitive pricing, ranks among the top three players in South Korea's online retail market. Its strategies significantly impact consumer choices and market trends.

Source Documents