Retail in Asia

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Online shopping in Korea reaches US$13.49 billion in a year

The active shopping via the internet of households is likely to contribute much to the gross domestic product of South Korea in terms of increasing production and reducing the inventories of local manufacturers.

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The prospects can be read from a surge in recent years in the monthly turnover of retailers selling products online.

According to Statistics Korea, monthly online shopping transactions reached US$13.49 billion in April 2021 (the latest available figure). That figure has posted growth of 67.1 percent over the past three years, from US$7.9 billion in April 2018.

On an on-year basis, the monthly turnover surged by more than US$2.6 billion, from US$10.6 billion in April 2020. The all-time high in history was posted in March 2021 at US$14 billion.

The COVID-19 situation has made households expand their online shopping by relatively reducing on-the-spot consumption at department stores, discount chains and restaurants.

By segment, agricultural, livestock and fisheries products posted growth of 178 percent during the April 2018-April 2021 period from US$188 million to US$526.5 million in online transactions. Turnover among online sellers of groceries and beverages increased by 143 percent from US$712 million to US$1.73 billion.

As a noteworthy point, food delivery and takeout services via internet orders soared 439 percent from US$320 million to US$1.7 billion over the corresponding three years.

Turnover of all products online topped US$8.7 billion for the first time in October 2018 after surpassing US$7 billion in September 2017.

The surge has been backed by systematic parcel delivery services, which send products to consumers nationwide in one to three days, or even in less than 10 hours in some urban areas.

Almost any kind of product — from drinking water, cosmetics and clothing to home appliances and furniture — is available online. A growing proportion of consumers were found to have also purchased goods offered by department stores and large discount chains via the internet.

An official at the Ministry of Agriculture, Food and Rural Affairs said that “the data shows changing consumption trends like diversification of food retail services or preference for convenience food.”

In particular, local specialties including fresh agricultural products in rural districts across the nation are drawing popularity online.

Meanwhile, the pandemic has caused a seriously widening disparity in the online sales performances of local retailers by product segment and business type.

Local households have sharply increased their online spending on agricultural, livestock and fisheries products as they have cut back on dining out.

On the contrary, online sales for tours, transportation, culture and leisure activities have declined sharply.

The volume of online transactions for tourism and transportation services stayed at US$602 million in April 2021. This recorded a 48 percent slide from US$1.16 billion in April 2018.

The turnover of online transactions for cultural and leisure activities fell by 46.9 percent from US$144 million to US$76.4 million over the same period.

Nonetheless, there are growing hopes for a bounce-back in sales of tour and cultural products in the coming months on the back of sharply rising vaccination percentage, relative to the population.

Statistics data also showed that online turnover of tourism and transportation services increased for the fourth consecutive month, though those were meager growth.

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“Local travel agencies are vitalizing drawing package or cruise tour schedules for both domestic and overseas destinations. Some agencies are moving to rehire the workers, who had to suffer layoffs in the wake of COVID-19,” said a Seoul-based employee in the tourism industry.