Marketplace model is the most commonly implemented business model in South Korea online retail market. An online marketplace model involves facilitating transactions between buyers and third party sellers who can interact with each other directly. The marketplace builder becomes the operator and provided customers with a platform to place their transactions. The marketplace operator aggregates the best offers for the customers without facing any hassles of handling logistics and inventories. . A typical e-commerce marketplace aggregates product information from multiple sellers, which allows users to compare different products and make purchases. Buyers visit the online marketplace, browse and select an item from the product range and the marketplace places that order through the third party seller, who in turn handles fulfillment of that purchase.
The South Korean online retail market can be generally segmented into the following product types naming- clothing and fashion products, books and stationary, electronics, food and grocery, sports music and entertainment, beauty products and the others which would consist of the infants and children products, household goods, motor parts and accessories and garden products. The leader in market has been the electronics product category. Moreover, people can purchase the products easily from the local markets at a cheaper price owing to a presence of a large number of manufacturers.
The South Korea online clothing and fashion products market has emerged as one of the fastest growing market in the previous few years. This industry has been majorly driven by factors such as high speed internet, smartphone penetration in the country and a high proportion of middle aged people in the country who prefer to keep up with the ongoing trends and fashion. . The online clothing and fashion products market is poised to grow at a CAGR of 25.8% in the coming five years backed by higher demand of the clothing and fashion products by the middle aged population of South Korea who are generally skeptical to make large transactions online.
Online books and stationery market is a vital component of South Korea online retail market. The capacity for online books and stationery market in South Korea has showcased a glorifying growth rate, which was determined by advent of e-books which can be read on PCs, mobile phones, laptops and tablets. The South Korea online books and stationery market has showcased a compound annual growth rate of 8.2% in the period, 2009-2014. With an increase in schooling population, the competition is going to intensify and new players have looked forward to establish themselves in the market. Kyobo for an example was the largest offline bookstore chain in the country; however with increasing popularity of e-commerce, they have initiated their online book store as well.
The mergers of organizations have always been successful in reducing the competition but at the same time they also increase the strength of the companies involved in the process. The mergers and acquisitions in the South Korea online retail market have opened up plenty of opportunities for the companies in terms of higher penetration, efficient capital allocation, greater customer base and increased reach of the companies indulged with a global presence. Apart from the ongoing investments Coupang is expected to be the largest online retailer of South Korea with its plan of expanding its product offering with help of the ongoing investments.
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Ankur Gupta, Head Marketing & Communications