eCommerce: Market Insight

eCommerce in South Korea: Key Insights

• Coupang Takes the Lead: Coupang's strategy for success includes offering fast delivery to accommodate the country's fast-paced lifestyle, a premium subscription service with member benefits and managing an own streaming platform.

• Electronic Online Store Hi-Mart: Lotte Hi-Mart sells primarily electronic goods. It has also embraced digital transformation and omnichannel strategies to improve the shopping experience for its customers.  

• Shinsegae (SSG) and Its Consumer-Centric Approach: SSG launched an open marketplace for individual sellers or retailers. The company offers recurring discounts to customers, which solidify SSG's position in South Korean eCommerce.

With its exceptional internet penetration rate, outstanding mobile device usage, and advanced digital connectivity, South Korea provides a fertile ground for the proliferation of eCommerce.

See how the leading businesses in the country are taking advantage of market conditions to expand online sales.

South Korea’s Top Online Stores at a Glance  

South Korea is the fourth largest eCommerce market worldwide, ahead of Japan. In 2023, South Korean eCommerce reached revenues of US$140 billion. The following are the leading online stores in the market.

Coupang.com was South Korea's leading online store in 2023, with net sales of US$21.1 billion. In second place is ssg.com, having generated revenues of US$1.2 billion. Third rank is nike.com with US$1.1 billion, followed by e-himart.co.kr, which generated a rounded US$1 billion in 2023. Ranked fifth is gmarket.co.kr with US$888 million.

Coupang: South Korea’s Amazon Equivalent and its Fast Delivery Strategy 

Coupang was founded in 2010 by Bom Kim, a Harvard Business School dropout. Since its humble beginnings, the company has worked its way up to being South Korea's leading eCommerce company. 

Coupang is the go-to store for Korean households, offering a wide range of products on its online platform (coupang.com). One of the company's key differentiators is its commitment to fast delivery, catering to the high demand for quick service in South Korea's fast-paced lifestyle known as the Ppalli Ppalli culture.  

To meet consumer demand for immediacy, Coupang introduced its "rocket delivery" service in 2014, which promises to deliver products to customers' doorsteps within hours or the next day. 

In addition, the company offers a premium subscription service called Coupang Wow, which provides members with exclusive benefits such as faster shipping and exclusive offers, ensuring a smoother shopping experience.

Coupang: South Korea's Second Largest Employer 

Coupang's focus on delivery and logistics infrastructure plays a critical role. The company has established strong relationships with suppliers, third-party vendors, technology partners, and logistics providers to improve its operational efficiency and service quality. 

Currently, Coupang is South Korea's second largest employer. The company had a workforce of more than 59,000 employees in 2021. By 2023, Coupang's employee number surpassed 69,000.

Beyond its core eCommerce business, Coupang is making significant investments in its video streaming service, Coupang Play, to compete in South Korea's competitive over-the-top (OTT) market.

Launched in December 2020, Coupang Play operates on a subscription model similar to well-known OTT platforms such as Netflix and Apple TV. In 2021, Coupang's OTT offering became an additional benefit worth US$2.40 (KRW 2,900) per month for Coupang's WOW members and online shoppers. This bonus was packaged with benefits such as cash back and guaranteed delivery services.

These strategic moves follow the company's successful debut on the U.S. stock market, where it raised US$4.6 billion. Overall, Coupang's commitment to fast delivery, extensive product line, and strategic investments in related services have fueled its growth and success in the South Korean market and beyond.  

Lotte Hi-Mart: Online Store Updates and Diverse Inventory

Lotte Hi-Mart operates as part of the Lotte Group, one of the largest conglomerates in South Korea. The Lotte Group is known for its strong brand presence and reputation in various industries, particularly retail and consumer goods. 

One of the key factors contributing to Lotte Hi-Mart's appeal is its wide and diverse product range. The store offers an extensive selection of consumer electronics, home appliances, gadgets, and other technology-related items. 

Recognizing the importance of digital transformation and eCommerce in today's retail landscape, Lotte Hi-Mart has made strategic investments in online sales platforms and omnichannel strategies. 

By embracing these technological advancements, the company has improved its performance, expanded its reach to online shoppers, and created a convenient shopping experience across channels.

Together, these factors have helped Lotte Hi-Mart solidify its position in the Korean market and maintain its success as a reputable and customer-centric retailer.   

Shinsegae: Collaborations and Consumer-Centric Strategies  

Over the years, Shinsegae has focused on developing strategic partnerships. In April 2021, the conglomerate launched an open market service for individual sellers or retailers to sell external products on its platform (ssg.com).

But SSG is also known for offering attractive discounts to its customers. For example, from March 25 to March 31, 2021, ssg.com had launched a promotion offering a 50% price deduction to customers who ordered fresh food overnight from Shinsegae's other retail subsidiaries in Seoul and the metropolitan area.

At that time, the company also announced that it would regularly offer the same promotion every second and last week of the month. These are just some of the strategies Shinsegae is using to retain its customer base.

South Korean eCommerce: Closing Remarks

South Korea's eCommerce market reflects prevailing consumer preferences for immediacy, convenience and a wide range of products to choose from. Among the online stores with the highest net sales in 2023, Coupang stands out at US$21.1 billion, and the company is now considered the second largest employer in South Korea.

With market sales surpassing Japan's and continued growth projected throughout the decade, South Korea is a market to be watched.

Sources: NY Times, Business Korea, Statista, ECDB