South Korea’s e-commerce market is projected to be valued at KRW263.5 trillion ($242.2bn) in 2025, building on sustained growth supported by the country’s robust technology infrastructure, according to GlobalData, a leading data and analytics company.
E-commerce in South Korea ranks among the most developed in the world, with high-speed internet and a significant number of tech-savvy customers.
The sector has been on sustained growth for the past few years, data showed.
Following the COVID-19 pandemic and subsequent lockdown and social distancing measures, e-commerce payments in the country grew by 22.2% in 2020.
In 2021, it is expected to register similar growth of around 25.4% to reach KRW131.0 trillion (US$120.3 billion).
Banking and payments senior analyst at GlobalData, Shivani Gupta, commented, “The pandemic has transformed the way consumers shop as they are increasingly switching online channels for purchases due to social distancing rules and closure of brick-and-mortar stores. Wary consumers prefer to stay home to avoid social contact, making online purchasing even more appealing.”
The growth in e-commerce sales was driven by the demand for grocery, electronics, and healthcare products during the pandemic.
Apart from traditional payment solutions, new payment methods like ‘buy now, pay later’, which is gaining popularity across the Asian-Pacific markets like Australia and India, are also set to gain prominence in South Korea with companies like Coupang and Naver offering this service, GlobalData added.
In August 2020, e-commerce giant Coupang launched its ‘buy now and pay later’ service on a trial basis, enabling consumers to purchase products up to KRW300,000 per month, which was later increased to KRW500,000.
A similar buy now and pay later service was launched by the online platform Naver in April 2021.
While domestic companies mainly drive the South Korean e-commerce market, the growth opportunity is attracting international companies, which will further drive e-commerce sales, GlobalData noted.
For instance, Canada-based e-commerce company Shopify launched its e-commerce platform in South Korea in June 2020.
During the same month, social media giant Facebook launched Facebook Shops, a service that allows merchants to set up online shops and sell digitally.
Gupta stated, “The COVID-19 pandemic has brought a lasting change in the consumer buying behaviour. At the same time, the drive to remain in the competition and cost-efficiency proved essential for companies to adopt e-commerce strategies.
“The uptrend is likely to continue over the next few years driven by the growing consumer preference, and the emergence of new online payment methods.”
In June of this year, a report from Euromonitor International revealed that e-commerce sales in the Asia Pacific region are likely to nearly double by the mid part of the decade, reaching a value of $2 trillion (€1.63 trillion).