Published : 2013-12-26 21:12
Updated : 2013-12-26 21:12
Amazon.com, a U.S.-based online retail giant, is set to enter the South Korean market next year, a local media outlet reported Thursday.
“As far as I know, Amazon is currently preparing to enter the Korean market,” an industry source told online media edaily, adding that local companies are gearing up for a possible showdown with the world’s largest e-commerce company.
Amazon.com has already gleaned some success in the Asian market. In the fourth quarter of last year, sales by its Japanese branch reached $7.5 billion, making up 12 percent of the retailer’s total global sales.
The company is likely to make a big splash here, as Korea already has a thriving online shopping market with its tech-savvy customers comfortable with purchasing various goods online.
In the world’s most wired country, South Koreans often turn to the Internet to buy a variety of products at a bargain. An estimated 32 trillion won ($30.2 billion) in goods were sold online in 2012.
While most online transactions take place on domestic websites, overseas online shopping via credit card payments amounted to 970 billion won in 2012, showing that Korean customers actively comb both Korean and foreign websites to save cash and get the best deals. The figure is expected to rise to 1.27 trillion won this year.
A survey by the Korea Chamber of Commerce and Industry showed that low prices were the main reason (67 percent) South Koreans turn to overseas retail websites.
Once such obstacles are removed by the establishment of Amazon.com’s branch here, more customers will likely use Amazon services, whose items on sale are cheap enough to pose a direct challenge to Korean rivals.
For all the concerns about Amazon’s belated yet potentially threatening entry, some observers say that the impact might be limited.
For one, Amazon must follow complex and cumbersome online transaction regulations, which involve the installation of extra security programs. It remains unclear how effectively the U.S. firm, famous for its patent-protected One Click purchase, will perform under the Korean regulations.
Another challenge for Amazon is the unique online market structure here. Major Internet portals such as Naver and Daum offer a price comparison service as well as a wealth of product reviews and shopping information generated by bloggers and online communities ― a market environment that is tough for foreign players.
By Yoon Min-sik and news reports (email@example.com)