Sector Trend Analysis – E-commerce market trends in South Korea

Note: This report includes forecasting data that is based on baseline historical data.

Executive summary

With a population of 51,309,705 (2021 estimated), South Korea's GDP was 2.9% (2018), 2.0% (2019), −1.1% (2020) and will be 3.2% (2021estimate). In 2020, South Korea was the twenty-seventh most populous country in the world with 51.8 million people. The population is expected to reach 52.2 million people by 2030. South Korea has a very slow population growth, one of the lowest birth rates in the world and an aging population that is growing rapidly.

South Korea ranked 5th out of 189 countries in the World Bank's Ease of Doing Business 2019 report. New Zealand, Singapore, Denmark and Taiwan are the top four considering many social, regulatory and economic factors. The US ranked 6th while the UK ranked 8th.

The most important retail trend fueled by COVID-19 was the continued rise of e-commerce. It is likely to continue even as vaccine distribution provides hope for a return to normalcy. In fact, 74% of global retail and consumer brand professionals said they expect the crisis-led rise in online shopping to become permanent in an October survey fielded by Euromonitor International.

E-commerce registers 27% current value growth in 2020 to reach US$104.7 billion.

South Korean e-commerce company Coupang performs well by meeting the needs of South Korean consumers through same-day delivery and online grocery shopping service, it captured 19.2% share of the e-commerce sales in South Korea in 2020.

E-commerce is set to see a 9% current value CAGR (7% constant 2020 value CAGR) over the forecast period to 2025.

South Korea has concluded free-trade agreements (FTAs) with at least 57 countries, including Canada. As of January 1, 2021, 98.5% of Canada's exports benefit from duty-free access into Korea under the Canada-Korea Free Trade Agreement (CKFTA).

 

Socioeconomic profile

Country economic profile

South Korea had a gross domestic product (GDP) of US$1.6 trillion in 2020, which is expected to increase 5.3% by 2021.

Demographics

In 2020, South Korea was the twenty-seventh most populous country in the world with 51.8 million people. The population is expected to reach 52.2 million people by 2030. South Korea has a very slow population growth, one of the lowest birth rates in the world and an aging population that is growing rapidly.

Consumer income and expenditures

Average annual consumer expenditure in South Korea was US$ 13,866 per capita in 2020, and is expected to increase by 5.0% by the end of 2021. In 2020, average annual consumer expenditure of food and non-alcoholic beverages represented US$1,606, and is expected to increase by a compound annual growth rate (CAGR) of 3.4% from 2021 to 2025.

The consumer foodservice industry is expanding alongside a rising middle-class population, and is forecasted to reach a total sales value of US$104.6 billion by 2025.

With growing disposable incomes, South Korean consumers are seeking products that offer convenience. Packaged food sales continue to grow steadily, and are expected to reach a value of US$31.1 billion by the end of 2025.

Global E-commerce

The most important retail trend fueled by COVID-19 was the continued rise of e-commerce. This growth is likely to continue even as vaccine distribution provides hope for a return to normalcy. In fact, 74% of global retail and consumer brand professionals said they expect the crisis-led rise in online shopping to become permanent in an October survey fielded by Euromonitor International.

E-commerce has been the fastest-growing channel over the last decade, with the crisis accelerating such shifts. Euromonitor International projects that half of the absolute value growth for the global retail sector over the 2020-2025 period will be digital. That equates to US$1.4 trillion in absolute value growth as more goods are sold online. To put that projected e-commerce growth in context, that would be roughly the size of the total value of products sold across all retail channels just five years ago.

China and the US will account for 55% of that value growth in e-commerce opportunities, which is to be expected from the largest e-commerce markets globally. From a percentage growth perspective, Latin America, an emerging e-commerce region, saw e-commerce adoption accelerated due to the crisis as more consumers shopped online to obtain necessities.

The digitally inspired changes that are rewiring retail go beyond just channel shift. New business models have gained steam and commerce ecosystems have emerged, forever changing how retailers and brands reach and engage with a digitally connected consumer base. Over the last decade, the digital revolution has given way to a more complicated and fragmented retail landscape. Marketplaces, direct-to-consumer brands, social commerce, live selling and voice commerce are some examples that speak to this diversification of paths to reach the end-consumer.

E-commerce in South Korea

Consumer Habits and Consumption Trends

  • E-commerce Channel enjoys influx of senior consumers as social distancing restricts visits to physical stores
  • E-commerce registers 27% current value growth in 2020 to reach US$104.7 billion
  • South Korean e-commerce company Coupang performs well by meeting the needs of South Korean consumers through same-day delivery and online grocery shopping service
  • E-commerce set to see a 9% current value CAGR (7% constant 2020 value CAGR) over the forecast period to 2025

The e-commerce channel recorded the strongest growth in 2020 among retailing channels in South Korea as consumers' lifestyles changed due to COVID-19, which accelerated the adoption of online shopping among a wider consumer segment, especially older consumers who have traditionally preferred shopping in physical stores. Although there were a few challenges, such as delayed delivery and frequent stock-outs during the first month of the COVID-19 outbreak, in general South Korean consumers experienced a smooth shopping process since major e-commerce players have adapted to the surge of orders with a well-established stock management and delivery system. Additionally, e-commerce players continued to explore creative ways to ensure customers spent more time and shopped more frequently at online stores, which also built a strong foundation for the channel's growth.

Same-day delivery is the new standard

In 2020, the demand for online grocery shopping skyrocketed as consumers spent more time at home compared to pre-COVID-19 era. However, some South Korean consumers still preferred shopping in offline stores for grocery items so they could check the condition of products by seeing and touching them and not have to wait a few hours or a day for delivery. Retailers responded by offering a same-day delivery service by fully leveraging the company's own capabilities, as well as partnering with hyperlocal delivery providers and logistics companies. For instance, supermarket players introduced faster delivery services ranging from 30 minutes to three hours, assuring freshness of fresh food items by having them delivered from the nearest physical outlet from the customer once the order was placed.

Coupang performs well despite fierce competition

Coupang Corp has grown fast during the past five years as it successfully met the needs of South Korean consumers who highly value fast delivery. Recently, the company has been focusing on expanding its private label product line by adding new product categories such as apparel and footwear to its portfolio. Marking three years after Coupang launched its first private label Tamsa, the company spun off its private label arm as a subsidiary Coupang Private Label Business (CPLB Corp) in July 2020, making a move to intensify investment in private label. Coupang's wide private label coverage is comparable to traditional retailers such as E-Mart and Lotte due to its competitive pricing thanks to its bargaining power over suppliers. It is likely that Coupang's private label will continue to help differentiate it from other e-commerce competitors, such as Naver and e-Bay.

Tech giant Naver strengthens its online shopping business

Naver Corp's undeniable strength comes from being the nation's most used search engine. Naver's online marketplace platform took off in 2020. Major consumer brands such as LG Household & Health Care and Gucci opened brand stores on Naver Shopping to reach its customer base. To strengthen its delivery capacity, Naver is working closely with its logistics partner CJ Logistics Corp to provide a better fulfilment service to merchants. For instance, products can be delivered within 24 hours upon purchase if consumers order from LG Household & Health Care's brand store operated on the Naver Shopping website. Although the number of brands having such a fulfilment contract is limited, the enhanced logistics capability provides potential to Naver Corp to compete against other leading e-commerce players with logistic capacity.

Aside from close partnerships with consumer good brands and an upgraded logistics capability, the company's paid membership called Naver Plus Membership is expected to become another strong driver that will give the company a competitive edge. The monthly membership fee is Can$5.3 per user and the benefits include cash points saved up to 10% of purchases made on Naver's shopping platform, membership points that can be used to purchase digital products such as cloud storage (up to 100GB), music streaming and webtoons provided on Naver Corp. Moving forward, Naver Corp is expected to disrupt South Korea's e-commerce space and continue to gain market share by leveraging its unique position as the nation's most visited search engine, a digital content provider and a shopping mall.

Recovery and opportunities

Enhancing logistics capability is key to widen geographic coverage and ensure on-time delivery

Major players have improved their logistic capacity and ability to provide faster delivery across the country. SSG.Com, a rising player in South Korea's e-commerce channel is working closely with its sister company, E-Mart Inc, a leading hypermarket player. E-Mart Inc transformed one of its outlet stores in Seoul to a hybrid outlet that functions as a traditional hypermarket as well as a fulfilment centre for online orders placed on SSG.Com. The central location of the outlet is well suited to function as a warehouse for delivery service to customers in Seoul, which saves cost and time, particularly for chilled and frozen produce. Although SSG.com's dawn delivery service has been limited to the Seoul metropolitan area, it will help the company to grow faster if the physical stores of E-Mart Inc, which are in all major cities in the country, can be used as a dawn delivery centers.

Market Kurly, a premium grocery shopping mall specializing in dawn delivery, opened a new logistics centre in Gimpo city in March 2021.which is closely located with the west side of Seoul, by the end of 2020 to cope with increasing demand for online grocery shopping. Since COVID-19 is likely to have a lingering impact on the South Korea retailing industry, it is expected that e-commerce players' investment in logistics infrastructure will be boosted in the coming years.

E-commerce is no longer an option but a must for traditional retailers

Lotte Shopping, one of the leading conglomerates in South Korea's store-based retailing channel launched a mobile app called Lotte ON, a platform that integrates online stores of Lotte's retail brands, to remain relevant to the market that is digitalizing fast. While COVID-19 certainly gave a signal to the company to carry out restructuring of physical retail stores since early 2020, Lotte's Shopping's goal to provide a seamless omni channel capable of connecting its online store with its offline outlets. Lotte ON aims to provide personalized shopping experiences by providing product recommendations to customers based on purchase records.

Similarly, other traditional retailers focused on store-based retail channels are likely to include e-commerce elements to their business models to strengthen their digital presence over the forecast years. Despite this, Korean e-commerce platforms, including some retailors, prefer to source food products, including foreign food products from local vendors. This practice impacts on how foreign food exporters work with Korean e-commerce giants as they need to have Korean partners. It would nice to highlight this factor in the report for Canadian audience.

Live commerce transforms mobile shopping as an entertainment platform

Social media has grown as a key platform for marketing activities for brands and retailers, with companies leveraging live commerce to increase traffic to shopping platforms. For instance, Kakao Corp, South Korea's leading messenger app launched a live-commerce channel called Kakao Shopping Live on Kakao TV, the company's own video platform, which has been well received by customers thanks to the exclusive deals and discounts.

TMon also introduced a live-commerce event based on the famous video game, Street Fighter, which has increased the foot traffic on their website. In this live-commerce event, celebrities compete by selling products during the live show. It is anticipated that live commerce is expected to grow as a preferred marketing platform.

The digital consumer and landscape in South Korea

Key trends

Internet access
Besides having globally the highest average internet connection speed, with an online penetrationFootnote 1 of about 92.7%, South Korea ranks as one of the most connected countries in the world. According to a government survey, of the nearly 19 million households in Korea, 99.2% have internet access via optical LAN, xDSL, cable modem, mobile or otherwise. Almost 99% of South Koreans go online at least once a week, spending an average 14.3 hours a week on the internet. More than five million Koreans aged 60 and over are browsing the web, over 50% of the age group, mostly for instant messaging (compared to only 30% of the same age group in the U.S.). South Korea ranks sixth in the world in terms of smartphone usage, with a penetration rateFootnote 1 of 77.7%. South Korean official sources estimate the number of smartphone subscribers at 47.4 million, although the figure includes users with more than one account. The search engine market is dominated by local players, with Naver holding 74% of the market share, followed by another local search engine - Daum - at 16%. Google has a 10% market share which, despite being negligible, has been growing quickly over the years.
E-commerce market
South Korea is the third largest e-commerce market in Asia. Domestic online purchases reached US$55.9 billion in 2016, up from US$47.6 billion recorded in the previous year. According to a report by Research and Market, e-commerce sales made up nearly 20% of total retail sales in 2016 due to factors such as a developed Internet infrastructure and having the highest Internet penetration rateFootnote 1 in the region. Over half of internet users purchased products online and among them, two-thirds made monthly purchases. The most popular categories of items purchased online were travel, clothes and electronics. The degree of E-commerce use in South Korea is impressive: over half of online retail sales in the country came from mobile devices last year. Convenience is a major driver of e-commerce, with smartphones ranking as the most preferred device for online shopping, being used more frequently than computers. Popular shopping apps like 11Street and Coupang both had over a million users, eBay Korea holding the largest market share. In June 2021, eBay Korea was acquired by Shinsegae Co Ltd, South Korean retail giant that operates SSG.com. With this acquisition, Shinsaegae Co Ltd has become the second largest e-commerce company in Korea. Other popular e-commerce sites include Auction, G-market, Ticket Monster (TMON) and We Make Price. Amazon is also active in the market. Online purchases from foreign retailers have been rapidly increasing because Koreans find less expensive prices on overseas websites even after adding international shipping fees and import duties. Online purchases from foreign retail sites reached US$1.6 billion in 2016, with 65% purchased from U.S. online retailers. Although no official data is available for B2B e-commerce, many players have been looking to expand into B2B e-commerce on consumable sales to small and medium sized companies. G-market was the first one to launch a B2B shopping site called 'Biz on' in 2012. Auction also has B2B sites called 'Biz club' for food ingredients and 'Biz plus' for other consumables. Interpark launched 'I market Korea', a platform that integrates B2B and B2C services, while Wemakeprice started 'Wemakeprice Bizmall' in 2016. With 5.4 million business owners and 3.5 million small and medium-sized companies, the B2B e-commerce market is expected to be very competitive.
E-commerce sales and customers
The most popular products sourced from online retailers are travel & reservation services (17.4%), home appliances & electronics (11%), clothing (10.6%), home & car accessories (10.2%), cosmetics (7.9%) and computers (6.2%) in 2020. For the first time, online purchases surpassed hypermarkets' sales making e-commerce the biggest retail channel in Korea. The average revenue per user is currently estimated at US$ 1,150. The most active age groups are those between 20-29 and 30-39, with roughly 80% of their members purchasing goods and services online. For groups aged 40-49 and 50-59 the rates are still lower - at 57% and 30% respectively - but they are rising steadily. As competition between e-commerce companies is increasing, quick delivery service is a key to attract more customers. To address this need, Coupang - one of the most popular e-commerce sites in Korea - invested US$ 1.3 billion to build logistics infrastructure for its delivery service called "rocket delivery" in order to be able to distribute goods within a day from the time of order placement. Two of the main reasons why people shop online, even though a close by shop could offer an item right away are because of discounts and convenience. According to a survey by Korea Internet and Security Agency, PC and mobile shoppers preferred payment method is credit card accounting for 72.4% of PC and 68.1% of mobile shoppers. Next are debit card and account transfer (both internet and mobile banking service). Payment gateways like Samsung Pay and Naver Pay are attracting more users.
Social media
As of the third quarter 2017, out of a population of 51.25 million, 84% of the population were active social media users (around 43 million). 88.3% of internet users aged above 6 use a messenger service and 99.2% of those use KakaoTalk, a local messenger with more than triple the penetration of Facebook Messenger (29.2%) and Naver's LINE (13%). Almost 30 million users are on KakaoStory, a social network inspired by KakaoTalk, while 26.6 million use Facebook. Instagram has slightly above 10 million active users monthly. Interest in Facebook among marketers and consumers is on the rise. A study by DMC Media, for example, found that the country's social media users aged 19-59 spend more time daily with Facebook than with any other social platform, regardless of device type or operating system. In addition, in South Korea companies use Facebook more than any other social platform.

E-commerce market sizes: retail sales including cross border

In 2020, e-commerce retail sales reached US$104.7 billion. Mobile e-commerce was US$71.6 billion. Foreign e-commerce reached US$3.6 billion while domestic sales reached US$101.1 billion. Among all the products sold online, food and drink topped all others at the US$20.2 billion.

E-commerce: Market sizes-retail, US$ million, 2015 to 2020
Category 2015 2016 2017 2018 2019 2020
E-commerce 37,683.6 44,916.8 63,343.5 76,930.6 84,982.9 104,669.5
Mobile E-commerce 16,957.6 24,326.9 38,734.6 48,927.9 55,153.9 71,593.9
Cross-border E-commerce 37,683.6 44,916.8 63,343.5 76,930.6 84,982.9 104,669.5
Foreign E-commerce 1,503.6 1,644.0 2,198.0 2,684.9 3,112.2 3,556.1
Domestic E-commerce 36,180.0 43,272.8 61,145.5 74,245.7 81,870.7 101,113.4
E-commerce by Product Category 37,683.6 44,916.8 63,343.5 76,930.6 84,982.9 104,669.5
Apparel and Footwear E-commerce 4,663.6 5,271.6 5,843.7 6,942.5 7,239.0 9,581.1
Beauty and Personal Care E-commerce 1,297.7 1,599.2 2,119.0 2,553.3 2,841.8 3,915.7
Consumer Appliances E-commerce 868.9 1,065.5 1,404.2 1,655.5 1,799.4 2,525.7
Consumer Electronics E-commerce 1,333.3 1,280.3 1,356.7 1,473.7 1,461.0 1,815.1
Consumer Health E-commerce 794.3 924.4 1,043.1 1,244.2 1,301.5 1,434.6
Food and Drink E-commerce 5,903.5 7,581.7 10,517.0 13,558.2 14,558.0 20,198.3
Home Care E-commerce 161.8 154.9 191.0 209.3 216.5 262.3
Home Improvement and Gardening E-commerce 92.2 92.2 96.9 103.8 100.9 110.1
Homewares and Home Furnishings E-commerce 948.6 947.2 1,003.4 1,070.6 1,142.0 1,334.2
Media Products E-commerce 3,967.8 4,717.8 5,638.9 6,637.6 7,219.0 7,912.8
Personal Accessories and Eyewear E-commerce 943.6 1,120.3 1,287.1 1,446.7 1,589.5 1,646.5
Pet Care E-commerce 469.7 528.0 639.9 753.8 819.8 943.1
Traditional Toys and Games E-commerce 250.6 258.0 270.2 281.5 268.6 291.6
Video Games Hardware E-commerce 67.5 55.6 67.7 79.5 86.6 108.3
Other E-commerce 15,920.5 19,320.0 31,864.5 38,920.4 44,339.4 52,589.9
Source: Euromonitor, 2021

The top three packaged foods sold online in 2020 were rice, pasta and noodles; dairy, and processed meat and seafood which also had the fastest growth at 89.6% from 2015 to 2020.

E-commerce retail sales of packaged foods by category in South Korea, historic, in US$ millions using fixed 2020 exchange rate
Category 2015 2016 2017 2018 2019 2020 CAGR* % 2015-2020
Total Store-Based Packaged Food Sales 21,526.4 22,087.4 22,226.7 22,559.4 22,502.3 22,712.5 1.1
Total E-Commerce Packaged Food Sales 2337.5 2584.8 2837.3 3156.2 3490.4 4741.2 15.2
Rice, Pasta and Noodles 1,151.7 1,200.1 1,214.9 1,207.8 1,208.0 1,529.5 5.8
Dairy 466.3 490.6 550.6 631.0 688.4 919.0 14.5
Processed Meat and Seafood 22.3 56.8 125.3 233.8 350.7 546.9 89.6
Ready Meals 119.0 141.2 167.6 196.4 236.3 404.1 27.7
Sauces, Dressings and Condiments 114.2 185.3 224.1 253.0 282.9 367.4 26.3
Baby Food 211.9 219.2 214.2 223.2 226.4 248.8 3.3
Baked Goods 36.2 46.3 62.7 81.0 100.7 142.0 31.4
Sweet Biscuits, Snack Bars and Fruit Snacks 85.0 88.0 91.9 96.0 105.6 131.2 9.1
Savoury Snacks 40.6 52.3 62.2 67.6 78.8 114.0 22.9
Confectionery 24.1 30.9 37.8 48.0 58.4 77.0 26.2
Ice Cream and Frozen Desserts 11.7 13.3 12.7 28.1 41.5 66.2 41.4
Edible Oils 33.5 34.4 35.9 37.6 39.6 58.5 11.8
Soup 4.3 6.3 12.5 18.7 25.4 55.1 66.5
Breakfast Cereals 3.6 5.6 8.5 16.0 27.6 51.8 70.5
Sweet Spreads 6.7 8.0 9.5 10.5 11.4 16.7 20.0
Processed Fruit and Vegetables 6.4 6.5 6.9 7.5 8.7 13.0 15.2

Source: Euromonitor International, 2021

*CAGR: Compound Annual Growth Rate

Total e-commerce packaged food sales increased at 12.3% from 2015 to 2020 while the total store-based packaged food sales decreased at 1.7% during the same period.

Store-Based and E-commerce retail sales of packaged foods by % breakdown in South Korea historical
Category Outlet Type 2015 2016 2017 2018 2019 2020 CAGR* % 2015-2020
Total Store-Based Packaged Food Sales 87.8 87.2 86.5 85.7 84.6 80.6 −1.7
Total E-Commerce Packaged Food Sales 9.7 10.4 11.2 12.1 13.2 17.3 12.3
Edible Oils Store-Based Retailing 92.3 91.7 91.2 90.5 89.6 85.5 −1.5
E-Commerce 7.7 8.3 8.8 9.5 10.4 14.5 13.5
Ready Meals Store-Based Retailing 88.5 88.0 87.9 87.0 85.7 78.8 −2.3
E-Commerce 11.5 12.0 12.0 12.7 13.6 20.0 11.7
Sauces, Dressings and Condiments Store-Based Retailing 91.2 86.1 83.7 82.4 80.5 76.6 −3.4
E-Commerce 8.8 13.9 16.3 17.6 19.5 23.4 21.6
Soup Store-Based Retailing 95.8 94.6 93.6 92.6 91.3 84.6 −2.5
E-Commerce 3.9 5.0 6.0 7.0 8.3 14.9 30.7
Sweet Spreads Store-Based Retailing 97.5 97.1 96.6 96.2 95.7 94.1 −0.7
E-Commerce 2.3 2.7 3.1 3.5 4.0 5.7 19.9
Baby Food Store-Based Retailing 54.5 55.3 56.1 53.3 51.4 49.0 −2.1
E-Commerce 45.5 44.7 43.9 46.7 48.6 51.0 2.3
Dairy Store-Based Retailing 74.5 74.6 74.1 73.4 73.0 69.2 −1.5
E-Commerce 11.1 11.6 12.9 14.3 15.4 19.9 12.4
Baked Goods Store-Based Retailing 98.7 98.5 98.0 97.5 97.0 95.8 −0.6
E-Commerce 1.3 1.5 2.0 2.5 3.0 4.2 26.4
Breakfast Cereals Store-Based Retailing 97.9 97.0 96.0 93.0 88.6 81.2 −3.7
E-Commerce 2.1 3.0 4.0 7.0 11.4 18.8 55.0
Processed Fruit and Vegetables Store-Based Retailing 93.1 93.0 92.6 92.0 91.1 87.7 −1.2
E-Commerce 6.9 7.0 7.4 8.0 8.9 12.3 12.3
Processed Meat and Seafood Store-Based Retailing 99.2 98.1 96.0 92.8 89.3 84.3 −3.2
E-Commerce 0.8 1.9 4.0 7.2 10.7 15.7 81.4
Rice, Pasta and Noodles Store-Based Retailing 75.5 74.8 73.7 73.9 73.7 68.9 −1.8
E-Commerce 24.5 25.2 26.3 26.1 26.3 31.1 4.9
Confectionery Store-Based Retailing 97.8 97.4 97.1 96.4 95.6 94.2 −0.7
E-Commerce 1.8 2.2 2.5 3.3 4.0 5.6 25.5
Ice Cream and Frozen Desserts Store-Based Retailing 99.4 99.3 99.1 97.8 96.4 94.9 −0.9
E-Commerce 0.6 0.7 0.8 1.8 2.9 4.3 48.3
Savoury Snacks Store-Based Retailing 97.8 97.1 96.6 96.4 95.7 94.3 −0.7
E-Commerce 2.1 2.8 3.3 3.5 4.2 5.6 21.7
Sweet Biscuits, Snack Bars and Fruit Snacks Store-Based Retailing 90.6 90.7 90.5 90.6 90.1 88.5 −0.5
E-Commerce 8.9 8.9 9.1 9.1 9.5 11.2 4.7

Source: Euromonitor International, 2021

*CAGR: Compound Annual Growth Rate

Company shares

Top three e-commerce companies in 2020 are: Coupang (19.2%), Naver Copr (13.6%) and eBAy Inc (12.8%). They together represented 45.6% of the market share in South Korea.

Company shares, global - historical owner, % breakdown 2015 to 2020 (retail value - retail sales price excluding sales tax)
Company name 2015 2016 2017 2018 2019 2020
Coupang Corp     6.6 9.1 14.7 19.2
Naver Corp 2.0 4.8 6.2 8.1 9.8 13.6
eBay Inc 22.2 21.2 17.0 16.4 14.5 12.8
SK Telecom Co Ltd 11.8 12.0 10.4 10.5 9.1 8.1
Wemakeprice Inc 4.9 5.5 5.8 6.4 6.2 5.4
Alphabet Inc 6.5 6.6 6.7 6.2 5.9 5.2
Lotte Group 5.9 4.9 4.0 3.9 3.8 3.2
Shinsegae Co Ltd 2.9 3.0 2.9 2.8 2.8 2.9
TMON Corp     3.4 3.1 2.9 2.5
GS Holdings Corp 3.4 3.2 2.6 2.6 2.5 2.1
Apple Inc 3.5 2.9 2.5 2.3 2.2 1.9
CJ ENM Co Ltd       2.0 1.7 1.5
Hyundai Department Store Co Ltd 2.9 2.6 2.0 1.8 1.6 1.3
Amazon.com Inc 1.7 1.7 1.5 1.5 1.5 1.3
InterPark Corp 2.8 2.7 2.1 2.0 1.1 0.9
Kurly Corp       0.2 0.4 0.8
Grab Co Ltd 0.2 0.3 0.3 0.4 0.7 0.7
Homeplus Co Ltd   1.1 0.8 0.7 0.7 0.7
YES24 Co Ltd 0.8 0.8 0.6 0.6 0.6 0.5
Croquis Inc 0.0 0.2 0.3 0.4 0.4 0.5
Bucket Place Inc     0.0 0.1 0.3 0.4
Daiso Sangyo Co Ltd 0.7 0.7 0.5 0.5 0.4 0.3
Kyobo Life Insurance Co Ltd 0.5 0.4 0.3 0.3 0.3 0.3
Rakuten Inc 0.1 0.1 0.1 0.1 0.1 0.0
CJ Corp 2.8 2.5 2.0      
Forward Ventures LLC 5.7 7.3        
Ticketmonster Inc 4.3 4.2        
Others 12.9 11.3 21.2 18.1 15.6 13.8
Total 100.0 100.0 100.0 100.0 100.0 100.0
Source: Euromonitor, 2021

Brand shares

Retailers and consumer brands now compete on their digital capabilities. Many in the industry have accepted this reality. Of those working at retailers and consumer brands, 68% expect consumers will judge them more on their digital prowess post-pandemic, according to a survey fielded by Euromonitor International in November 2020. Being evaluated on their digital resume means that retailers and consumer brands who were not investing in new technologies or adopting a digital-first mindset pre-crisis, have fallen further behind their peers. Do nothing and they risk alienating their consumer base, which has likely become more digital-savvy during this period of rapid digital transformation. Top three brands in South Korea e-commerce in 2020 are 3rd Party Merchants (Naver Corp), Coupang (Coupang Corp) and 3rd Party Merchants (Coupang Corp).

Brand shares, global - historical owner, 2015 to 2020 (percent)
Brand Name Company Name (GBO) 2015 2016 2017 2018 2019 2020
3rd Party Merchants (Naver Corp) Naver Corp 2.0 4.8 6.2 8.1 9.8 13.6
Coupang (Coupang Corp) Coupang Corp     3.4 5.5 7.3 10.0
3rd Party Merchants (Coupang Corp) Coupang Corp     3.1 3.6 7.5 9.2
11th Street (SK Telecom Co Ltd) SK Telecom Co Ltd 11.8 12.0 10.4 10.5 9.1 8.1
WeMakePrice (Wemakeprice Inc) Wemakeprice Inc 4.9 5.5 5.8 6.4 6.2 5.4
Google Play (Alphabet Inc) Alphabet Inc 6.5 6.6 6.7 6.2 5.9 5.2
Gmarket (eBay Inc) eBay Inc 7.6 7.2 5.9 5.7 5.1 4.9
3rd Party Merchants (eBay Inc) eBay Inc 9.0 8.6 6.7 6.0 5.3 4.6
Auction (eBay Inc) eBay Inc 5.7 5.4 4.4 4.6 4.2 3.4
SSG.COM (Shinsegae Co Ltd) Shinsegae Co Ltd         2.8 2.9
Tmon (TMON Corp) TMON Corp     3.4 3.1 2.9 2.5
GS SHOP (GS Holdings Corp) GS Holdings Corp 3.3 3.2 2.6 2.6 2.5 2.1
Lotte imall (Lotte Group) Lotte Group 2.8 2.4 2.2 2.3 2.3 1.9
App Store (Apple Inc) Apple Inc 3.3 2.7 2.4 2.1 2.0 1.8
CJ O Shopping (CJ ENM Co Ltd) CJ ENM Co Ltd       2.0 1.7 1.5
H Mall (Hyundai Department Store Co Ltd) Hyundai Department Store Co Ltd 2.9 2.6 2.0 1.8 1.6 1.3
Lotte.com (Lotte Group) Lotte Group 2.4 1.9 1.3 1.2 1.1 0.9
Interpark (InterPark Corp) InterPark Corp 2.8 2.7 2.1 2.0 1.1 0.9
Amazon (Amazon.com Inc) Amazon.com Inc 1.1 1.1 0.9 1.0 1.0 0.8
Market Kurly (Kurly Corp) Kurly Corp       0.2 0.4 0.8
Musinsa (Grab Co Ltd) Grab Co Ltd 0.2 0.3 0.3 0.4 0.7 0.7
Homeplus (Homeplus Co Ltd) Homeplus Co Ltd   1.1 0.8 0.7 0.7 0.7
YES24 (YES24 Co Ltd) YES24 Co Ltd 0.8 0.8 0.6 0.6 0.6 0.5
Zigzag (Croquis Inc) Croquis Inc 0.0 0.2 0.3 0.4 0.4 0.5
3rd Party Merchants (Amazon.com Inc) Amazon.com Inc 0.6 0.6 0.5 0.6 0.5 0.4
Lotte Mart (Lotte Group) Lotte Group 0.7 0.6 0.5 0.4 0.4 0.4
Oneul House (Bucket Place Inc) Bucket Place Inc     0.0 0.1 0.3 0.4
Daiso (Daiso Sangyo Co Ltd) Daiso Sangyo Co Ltd 0.7 0.7 0.5 0.5 0.4 0.3
Kyobo (Kyobo Life Insurance Co Ltd) Kyobo Life Insurance Co Ltd 0.5 0.4 0.3 0.3 0.3 0.3
Apple.com (Apple Inc) Apple Inc 0.2 0.2 0.2 0.2 0.2 0.1
Rakuten (Rakuten Inc) Rakuten Inc 0.1 0.1 0.1 0.1 0.1 0.0
3rd Party Merchants (Forward Ventures LLC) Forward Ventures LLC 3.4 4.1        
CJ Mall (CJ Corp) CJ Corp 2.8 2.5 2.0      
Coupang (Forward Ventures LLC) Forward Ventures LLC 2.3 3.3        
E-Mart (Shinsegae Co Ltd) Shinsegae Co Ltd 1.6 1.6 1.5 1.5    
Shinsegae Mall (Shinsegae Co Ltd) Shinsegae Co Ltd 1.3 1.4 1.4 1.4    
Tmon (Ticketmonster Inc) Ticketmonster Inc 4.3 4.2        
Others Others 14.5 11.3 21.2 18.1 15.6 13.8
Total 100.0 100.0 100.0 100.0 100.0 100.0
Source: Euromonitor, 2021

Apparel and footwear is expected to drive the greatest absolute value growth over the 2020-2025 period, followed closely by food and drink, according to Euromonitor. The former has felt the dramatic impact of the digital revolution over the last decade whereas the latter truly came into its own in 2020, posting the strongest growth rate of any category. Homebound consumers turned to the digital channel out of necessity to obtain groceries during lockdowns, helping the industry overcome barriers that previously held it back.

Apparel and footwear: historical, % breakdown (retail value - retail sales price excluding sales tax) - continued
Brand Name Company Name (GBO) 2015 2016 2017 2018 2019 2020
3rd Party Merchants (Naver Corp) Naver Corp 2.1 5.4 9.0 11.6 13.8 18.2
Musinsa (Grab Co Ltd) Grab Co Ltd 1.3 2.2 3.0 3.8 6.9 6.8
GS SHOP (GS Holdings Corp) GS Holdings Corp 8.4 9.1 9.2 9.6 8.5 6.5
Lotte imall (Lotte Group) Lotte Group 6.6 6.1 7.3 7.8 8.2 6.1
Gmarket (eBay Inc) eBay Inc 8.2 8.2 8.3 7.6 6.7 5.8
3rd Party Merchants (eBay Inc) eBay Inc 9.6 9.8 9.6 8.4 7.3 5.7
Coupang (Coupang Corp) Coupang Corp     1.5 2.3 3.6 5.7
CJ O Shopping (CJ ENM Co Ltd) CJ ENM Co Ltd       7.6 6.5 5.0
SSG.COM (Shinsegae Co Ltd) Shinsegae Co Ltd         5.7 4.9
Auction (eBay Inc) eBay Inc 6.0 6.0 6.4 6.9 6.2 4.6
Zigzag (Croquis Inc) Croquis Inc 0.4 1.8 3.3 4.1 4.4 4.4
11th Street (SK Telecom Co Ltd) SK Telecom Co Ltd 4.3 5.1 5.9 4.6 4.4 3.1
H Mall (Hyundai Department Store Co Ltd) Hyundai Department Store Co Ltd 3.9 4.0 4.2 4.2 4.1 2.9
Lotte.com (Lotte Group) Lotte Group 6.3 5.4 4.8 4.5 3.7 2.8
WeMakePrice (Wemakeprice Inc) Wemakeprice Inc 2.0 2.1 2.5 2.5 2.5 2.1
3rd Party Merchants (Coupang Corp) Coupang Corp     1.4 1.2 1.8 2.0
Amazon (Amazon.com Inc) Amazon.com Inc 1.3 1.4 1.6 1.6 1.6 1.3
Interpark (InterPark Corp) InterPark Corp 4.5 3.9 3.5 2.9 1.5 1.0
Tmon (TMON Corp) TMON Corp     1.4 1.2 1.2 0.9
3rd Party Merchants (Amazon.com Inc) Amazon.com Inc 0.3 0.4 0.5 0.5 0.5 0.3
Homeplus (Homeplus Co Ltd) Homeplus Co Ltd   0.5 0.4 0.3 0.3 0.3
Rakuten (Rakuten Inc) Rakuten Inc 0.2 0.2 0.2 0.2 0.2 0.1
Lotte Mart (Lotte Group) Lotte Group 0.2 0.2 0.2 0.1 0.1 0.1
CJ Mall (CJ Corp) CJ Corp 7.7 7.3 7.7      
Coupang (Forward Ventures LLC) Forward Ventures LLC 0.8 1.4        
E-Mart (Shinsegae Co Ltd) Shinsegae Co Ltd 0.8 0.7 0.6 0.3    
Shinsegae Mall (Shinsegae Co Ltd) Shinsegae Co Ltd 3.2 3.6 4.7 4.8    
Tmon (Ticketmonster Inc) Ticketmonster Inc 1.5 1.4        
Others Others 20.5 13.8 3.1 1.2 0.4 9.4
Total 100 100 100 100 100 100
Source: Euromonitor, 2021

Digital sales in the fashion industry are expected to continue their growth trajectory post-pandemic, increasing in both percentage share and actual terms, though slower than anticipated due to COVID-19. The apparel and footwear industry was hit particularly hard during the pandemic. The overall industry declined by 19% in 2020, with growth in the fast-expanding e-commerce channel slowing to 3% in 2021, down 20% from the previous year, according to Euromonitor. Although e-commerce will outpace the growth of other channels, its continued ascension will be dampened by the industry's overall decline, which is not expected to reach pre-pandemic sales until 2024.

Opportunities for Canadian suppliers

Opportunities

South Korea has concluded free-trade agreements (FTAs) with at least 57 countries, including Canada. As of January 1, 2021, 98.5% of Canada's exports will benefit from duty-free access into Korea under the Canada-Korea Free Trade Agreement (CKFTA).

South Korea is a growing market for safe, quality and healthy food products. Canada is perceived by Koreans as a country with good environment & quality products and South Koreans are willing to pay for big-name brands and quality Canadian products. Canada's low market share of South Korea's imported food represents room for expansion and CKFTA will help improve Canada's competitiveness within the South Korean market. Koreans are also tech savvy, and love to shop online, which is a new distribution channel for Canadian exporters.

As of January 1, 2021, 98.5% of Canada's exports (Tariff preferences for Canadian exports to Korea) will benefit from duty-free access into South Korea as a result of the Canada-Korea Free Trade Agreement (CKFTA). This includes new duty-free access for a variety of goods, such as: crude canola oil; various dietary supplements and health food products; frozen hagfish; frozen blueberries; beer; and certain oats. Upon full implementation of the CKFTA on January 1, 2032, South Korean tariffs will be eliminated on 99.75% of Canada's exports.

Before implementation in 2015, South Korea's average applied tariff rate was 52.7%.

By January 1, 2026, 100% of Canadian fish and seafood exports will be eligible to enter South Korea duty-free.

Before implementation in 2015, South Korea's average tariff rate was 16.5% (CKFTA for Agri-Food Exporters).

Ranking of Ease of doing business in South Korea

South Korea ranked 5th out of 189 countries in the World Bank's Ease of Doing Business 2019 report. New Zealand, Singapore, Denmark and Taiwan are the top four considering many social, regulatory and economic factors. The United States ranked 6th while the United Kingdom ranked 8th.

For more information

The Canadian Trade Commissioner Service:

International Trade Commissioners can provide Canadian industry with on-the-ground expertise regarding market potential, current conditions and local business contacts, and are an excellent point of contact for export advice.

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More on Canada's agriculture and agri-food sectors:

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Information on the agriculture industry by sector. Data on international markets. Initiatives to support awareness of the industry in Canada. How the department engages with the industry.

For additional information on Seoul Food and Hotel (SFH) 2021, please contact:

Ben Berry, Deputy Director
Trade Show Strategy and Delivery
Agriculture and agri-food Canada
ben.berry@agr.gc.ca

Resources

Sector Trend Analysis – E-commerce market trends in South Korea
Global Analysis Report

Prepared by: Hongli Wang, Senior Global Trade Analyst

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