South Korea is one of the most developed e-commerce markets globally. The ongoing COVID-19 pandemic and the subsequent lockdown and social distancing measures undertaken by government have further accelerated e-commerce sales in the country, according to GlobalData, a leading data and analytics company.
An analysis of GlobalData’s E-Commerce Analytics reveals that the country’s e-commerce market is estimated at KRW104.0 trillion (US$ 90.1 billion) in 2020, registering an annual growth of 22.3 percent. This is expected to grow at a compound annual growth rate (CAGR) of 12.0 percent to reach KRW163.7 trillion (US$ 141.8 billion) in 2024.
Nikhil Reddy, Banking and Payments Analyst at GlobalData, comments: “The demand for e-commerce has skyrocketed amid the pandemic as wary consumers prefer to stay at home to avoid social contact.”
According to Statistics Korea, online sales of food delivery services, household goods, and food and beverages products grew by 61.5 percent, 48.9 percent, and 39.4 percent, respectively, in June 2020 compared to same month last year.
The rise in e-commerce business is set to benefit the card companies as well as payment providers. According to latest data from GlobalData’s 2020 Banking and Payments Survey, payment cards are the most preferred payment method for e-commerce purchases in South Korea, accounting for 70.4 percent share in 2020. In addition, alternative payment methods such as Samsung Pay and Naver Pay are gaining prominence among consumers and collectively account for 16.8 percent share.
The growth opportunity is attracting international companies to launch their business in South Korea, which will further drive e-commerce market. For instance, Canada-based e-commerce company Shopify launched 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 setup online shop and sell digitally.
Reddy concludes: “The pandemic has brought a permanent change in the consumer buying behavior. With increasing number of people staying indoors, it will further accelerate the shift to e-commerce purchases.”