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Shop without limits

Internet, mobile, home shopping continue growth, with leading firms expanding abroad

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Published : 2012-12-21 20:37
Updated : 2012-12-28 13:19

Models pose in front of a camera while filming a television shopping program at Hyundai Home Shopping. (Bloomberg)
The evolution of electronic commerce and smartphone technologies has no doubt made online shopping one of the most common diversions, especially in densely wired countries like Korea.

Not even this week’s presidential election stopped shoppers from browsing malls on their computers and smartphones or calling home shopping networks.

Kim Hye-jin, an office worker in her 30s, was busy shopping online while the last televised debate between presidential candidates was aired last Sunday.

“My husband called me crazy because I couldn’t take my eyes off the computer for about two hours and didn’t pay attention to the debate,” she said.

“But I had to order things before the sale was over, and online shopping can really require intense concentration.”

Choi Jung-youn, a graduate school student in her 20s, goes to the department store about once a month, not to buy things but to try on clothes and check the price tags.

After trying on clothes she likes, she looks up their prices online using her smartphone to see which online malls sell them at the lowest prices. 
 A female office worker browses an Internet shopping mall site to buy clothes.(Chung Hee-cho/The Korea Herald)

Online shopping sales ― Internet shopping including mobile, television-based home shopping and catalogue shopping ― which have continued to post double-digit growth every year since 2000, are expected to rake in 32.5 trillion won ($30.2 billion) this year, said Shinsegae Group’s retail industry research center on Monday.

Online shopping rose as Korea’s second-largest retail sector after discount chains ever since it beat department stores in 2010 sales.

Reaching abroad

The economic slowdown which took a toll on domestic consumption, driving shoppers to buy things at cheaper prices online, is one reason, and the diversifying marketing strategies of online retailers is another.

Discount chains sold 37.3 trillion won and department stores 28.4 trillion won this year, according to the center’s estimates.

The Korea Online Shopping Association expects online shopping to trump discount stores in sales this year.

This doesn’t include Koreans’ purchases from overseas Internet shopping malls, which are growing each year, especially during American sale seasons. 

The center predicted that sales of large discount chains will drop and sales of department stores will slow next year.

“The mobile shopping market will constantly grow thanks to the widespread use of smartphones and increased users of the LTE service,” the center said in a report.

Korea’s three largest Internet shopping malls ― G-market, Auction and 11st ― carry everything from groceries to strollers and kimchi refrigerators for rental as well as used goods.

Sales of G-market, which eBay bought in 2009, are expected to exceed 5 trillion won this year, up from last year’s 4.9 trillion won, and command about 40 percent online market share.

Auction, acquired by eBay in 2001, does not share sales or earnings figures, but its market share is estimated to be in the mid-20 percent range.

11st, owned by SK Planet, controls about 31 percent of the domestic online mall market with sales estimated to have risen from 3.6 trillion won last year to over 4.5 trillion won this year.

Koreans also shop at online malls run by the nation’s major retailers such as Lotte, Shinsegae and Hyundai as well as countless individual sellers.

Having more or less dominated the domestic market, Korean online shopping malls are now taking their business abroad.

G-market last year upgraded its English version which now has English translations for almost everything sold on its Korean site. Shipping is available to about 70 countries.

11st opened its English version in early November.

About 80 percent of the merchandise sold through the English versions was purchased by foreigners in Korea, and the remaining 20 percent by people who live abroad.

Women’s apparel and cosmetics were the top-selling categories so far, followed by books/records/DVDs, processed food and laptops.

“Women’s clothing is most popular because of its low price and high quality, especially to customers in the U.S., Japan, Taiwan, Russia, Singapore and Australia. Korean-made leggings are among the best-selling items,” G-market spokesman Hong Soon-chul said.

Sales at the English-version G-market grew more than 30 percent this year, he said.

At 11st, study materials for preschoolers, elementary and middle school students, especially math books, were popular in Australia, the U.S. and Canada where many Korean families live.

“Lingerie such as A- and B-cup bras sold well in New Zealand, Australia and Canada, where body sizes are bigger than an average Korean’s,” said Moon Ji-hyung, spokesman for 11st.

China showed the highest orders for sanitary pads, especially those lined with Oriental herbs, as well as three-in-one instant coffee mixes.

Orders for charcoal, nursing bras, instant cooked rice, electric heating mats and electric rice cookers were made evenly from around the world.

Hallyu-related products such as Big Bang headphones, TVXQ CDs and posters were also popular.

11st offers shipping service to 103 countries, and has received orders from 35 nations so far.

Australia accounted for 30 percent of the overseas shipments, followed by China (24 percent), the U.S. (16 percent), Canada (14 percent) and Japan (5 percent).

For foreigners residing in Korea, 11st plans to hold special sales on daily necessities and foods at all times as well as various support programs for multicultural families and students.

“We also plan to run advertisements on major foreign websites and promote our English version in partnership with K-pop related sites next year in addition to promotions via Facebook,” Moon said.

Mobile shopping

An increasing number of Koreans, mostly in their 20s and 30s, are finding themselves hooked to mobile shopping, which offers even cheaper prices and faster access than shopping on computers.

Most major online retailers now sell products through their own smartphone applications. After downloading the app of your favorite online mall, you can browse through specials while you are on the bus or subway or in an actual store.

“Mobile shopping sales at Auction and G-market almost quadrupled this year,” said Kim Joon-pyo, head of eBay Korea’s mobile commerce department.

Smartphones jumped from 43 percent of all mobile phones in Korea at the end of last year to 63.8 percent this year, and is expected to soon reach 81.2 percent, according to DMC Media.

The domestic mobile commerce market is estimated to have grown 115 percent this year.

“The Financial Services Commission’s revised rules on electronic commerce permitted debit payments through smartphones, making it easier to pay using mobile phones,” DMC Media said.

“The mobile shopping market is expected to grow 150 percent on annual average through 2015 thanks to the increased use of smartphones.”

On Thursday, eBay Korea opened a shopping aid app that provides an integrated online price comparison service and shopping information based on a system optimized for mobile devices.

The app offers a map service with sale information on supermarkets and other offline stores near the user, allows real-time comparison of a product’s online and in-store prices as well as the average price at major discount chains.

The search system recognizes not only text, but also bar codes and has voice control.

Home shopping

Television-based home shopping is another major, growing pillar of online shopping.

Among Korea’s key home shopping networks, CJ O Shopping and GS Shop command the largest market shares, followed by Hyundai Home Shopping and Lotte Home Shopping.
A customer watches a TV home shopping program. (Chung Hee-cho/ The Korea Herald)

Their overseas businesses are fast expanding as well.

Starting with China in 2004, CJ O Shopping then launched in India in 2009, Japan and Vietnam in 2011, plus Thailand and Turkey this year.

Overseas sales accounted for 31.2 percent of CJ O Shopping’s total sales last year, up from 3.1 percent in 2005.

CJ O Shopping’s Turkish arm MCJ, a joint venture with a media group in Turkey, started official broadcast in Istanbul early this month. MCJ also opened an online shopping mall.

“Turkey’s economy grew 9 percent and its Internet shopping market expanded over 50 percent last year. We aim to become a key player in the country’s retail sector,” MCJ president Bang Sun-hong said.

Beginning with India in 2009 and Thailand last year, GS Shop launched VGS Shop in Vietnam, True GS in Thailand and MNC Shop in Indonesia this year.

GS Shop’s active overseas business and export of $5.4 million worth of products made by small and medium-sized partner firms earned the company a $5 million export award from the Seoul government early this month.

Competition is hot in Vietnam where CJ, GS and Lotte have entered.

In Korea, as the clout of home shopping networks on product suppliers grows, some of the networks’ merchandisers were found to have enjoyed kickbacks.

A former merchandiser at N Home Shopping received a Mercedes and a BMW from a supplier in exchange for placing its products in primetime broadcast spots, the prosecution said on Monday after indicting seven ex-staff members of four home shopping networks on similar charges.

She also collected between 2 million and 6 million won each month from other suppliers and up to 4 percent of product sales in rebates through bank accounts under borrowed names.

She took some 427 million won from suppliers for about five years until July, about 100 million won of which she paid to the network’s programming manager in exchange for placing certain products in best-selling time slots, prosecutors said.

By Kim So-hyun (sophie@heraldcorp.com)

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