in partnership with
e-Exporting to Korea –
A Guide for British Companies
UK Trade & Investment
UKTI’s E-Exporting Programme aims to help UK companies sell their products or services
to millions of global consumers and grow their business through online exports.
UKTI’s E-Exporting Programme helps UK companies who are:
• New to selling online
• Already selling online, but need help with specific issues
• Experienced in online sales, but are looking to sell on multiple platforms globally
The programme enables you to:
• Arrange a free meeting through your local UKTI office to get expert international trade advice
and support, and access to UKTI’s global network of contacts
• Meet an e-commerce adviser where relevant to help develop and implement an international
online strategy
• Set up on e-marketplaces quickly and also identify new e-marketplaces around the world
• Access better than commercial rates to list on some e-marketplaces, including lower
commission fees and ‘try for free’ periods
• Join our mailing list for opportunities to hear from industry experts, network with like-minded
individuals and find out about e-commerce trends
• Access the E-Navigator – This is an intelligent database with information on the world’s
top e-commerce platforms. UK companies will be able to use the tool to identify overseas
e-marketplaces to sell through, based on consumer search data, country selection and product
category. The E-Navigator will be publicly launched in November 2016 as part of UKTI’s new
digital service.
For more information on UKTI’s E-Exporting Programme, visit gov.uk/e-exporting and follow
@UKTIEcommerce on Twitter.
1 UK Trade & Investment
UK Trade & Investment
UK Trade & Investment (UKTI)
works with UK based businesses
to ensure their success in
international markets through
exports. We encourage and
support overseas companies
to look at the UK as the best
place to set up or expand their
business.
To find out more about how
we can help you in the UK
and overseas, please visit our
website at: www.ukti.gov.uk
Contact us
Opportunity.Korea@fco.gov.uk
e-e[email protected].gov.uk
Follow us
Facebook: UK in ROK
Twitter: @UKTI_Korea
@UKinKorea
@UKTI
About Intralink
Intralink develops and executes
sales, licensing and investment
strategies for European and
American companies targeting
new markets in East Asia.
Through our proven Surrogate
Sales Program™, we provide
companies with a low risk,
cost effective and practical
means to target these markets,
generate new or incremental
revenues, and establish an
in-country presence through a
local subsidiary, partnership or
acquisition.
In addition, we offer a range
of pre- and post-market entry
services, including opportunity
assessments, distributor and
supplier searches, investment
coordination and local
representation. We work with
our clients to commercialise
technology, bring products to
market, secure Foreign Direct
Investment, and source capital
from strategic investors.
Our clients are start-ups, small
and medium-sized enterprises,
government organisations and
multinational companies in the
automotive, energy, healthcare,
retail, technology and other
high-growth sectors. Through
our team of over 60 full-time
bilingual employees based in
Asia, Europe and North America,
we offer a transparent and
hands-on approach, extensive in-
country contacts, and over
25 years of market experience.
Founded in 1990, Intralink
is headquartered in Oxford,
England, and has offices in
London, Berlin, Silicon Valley,
Boston, Shanghai, Tokyo, Seoul
and Taipei.
Contact us
jonathan.cleave@
intralinkgroup.com
Follow us
Twitter: @Intralink_Asia
@Intralink_Korea
1. e-Exporting Opportunities for 4
British Brands
2. Korea Overview 6
3. e-Commerce in Korea 8
3.1. Market Overview 8
3.2. Key Characteristics 10
3.2.1. Policy 10
3.2.2. The Consumer 11
3.2.3. m-Commerce 11
3.2.4. Payments 11
3.2.5. Delivery 12
3.2.6. Customer Service 12
3.3. Open Markets 13
3.3.1. Gmarket (eBay) 15
3.3.2. Auction (eBay) 15
3.3.3. 11th Street (11ST) 16
3.3.4. Coupang 16
3.3.5. WeMakePrice 17
3.3.6. Ticket Monster 17
3.3.7. Naver Corp 17
3.4. Online Shopping Malls 18
4. Cross-border Online Shopping 20
4.1. Market Overview 20
4.2. Key e-Export Categories 23
4.2.1. Food & Beverages 23
4.2.2. Fashion 24
4.2.3. Beauty & Cosmetics 26
4.2.4. Baby Products & Toys 27
4.2.5. Home & Living 29
5. Market Entry Strategies 32
5.1. Market Entry Methods 32
5.1.1. Level 0: Using a Global 32
e-Commerce Platform
5.1.2. Level 1: Website with Shipping 33
Options to Korea
5.1.3. Level 2: Website Localisation 34
5.1.4. Level 3: Dedicated 35
Customer Support
5.1.5. Level H: The Hybrid 36
5.1.6. Level 4: Multi-channel 37
5.2. Marketing 38
5.2.1. Level 1: Adding Korea to 38
Current Digital Media Plan
5.2.2. Level 2: Social Media 39
and Local Internet Personality
Sponsorships
5.2.3. Level 3: Using Local 39
Digital Media Agency
6. Logistics and Customs 40
6.1. Logistics 40
6.2. Customs 41
2 e-Exporting to Korea – A Guide for British Companies
Contents
Figure 1: Retail and e-Commerce 8
Sales Growth
Figure 2: Cross-border e-Commerce 20
Market Size (GBP)
Figure 3: Overseas Direct Purchase 21
Clearances by Country (% of Total)
Figure 4: Product Categories 21
Purchased Directly from
Overseas (% of Total)
Figure 5: Korea’s e-Commerce 22
Landscape
Figure 6: Search Engine Market 39
in Korea
Figure 7: Manifest Clearance 42
Figure 8: Rapid Entry / 43
Simplified Clearance
Figure 9: Standard Clearance 43
The exchange rates used in the report are as
follows: GBP 1 = USD 1.46 = KRW 1,740
In this report, “Korea” is used to refer at all
times to South Korea
3 UK Trade & Investment
Table of figures
4 e-Exporting to Korea – A Guide for British Companies
An Overview of
e-Exporting Opportunities
South Korea’s e-Commerce market is thriving and oers
British retailers and brands huge opportunities. With rising
disposable incomes, a technologically savvy and increasingly
outward-looking population, and an Internet and mobile
telecommunication infrastructure that is among the best in
the world, Korea is at the forefront of both domestic and
cross-border e-Commerce trends.
British goods enjoy a strong
reputation among Koreans
and are known for their design,
quality and heritage. Whereas
US e-commerce platforms have
dominated the overseas direct
purchasing market in Korea until
now, market watchers believe that
direct purchases from the UK,
along with China and Germany,
will see substantial growth over
the coming years.
The Korean
e-Commerce Market
Korea boasts the world’s seventh
largest e-commerce market and
trails only behind China and
Japan in the APAC region. The
e-commerce market was worth
GBP 25bn in 2015 (9% of total
retail sales) and, with 13% year-
on-year growth, is expected to
surpass GBP 32bn by 2018. The
country’s e-commerce industry
is very competitive, with open
market platforms (Gmarket,
11th Street), social commerce
platforms (Coupang, Ticket
Monster) and online shopping
malls (SSG, Lotte Mall) all vying for
market share. It is also a market
dominated by domestic brands –
the global giants of e-commerce
such as Amazon or eBay have
either failed to penetrate the
market and to secure a foothold.
Korea’s advanced Internet
infrastructure plays a key role
in facilitating the growth of
e-commerce. Korea is the only
country in the world that boasts
average download speeds of
over 20Mbps. m-Commerce is
particularly well developed in
Korea with over 80% of the
country’s population subscribed to
LTE services, each browsing on an
average of 2.3 mobile devices. One
third of smartphone users make a
purchase with their phone at least
once a week and retail mobile
conversion rates are twice as high
as the UK. Some e-commerce
websites in Korea record as much
as 70-75% of their transactions on
mobile.
Cross-border
e-Commerce in Korea
Korean cross-border e-commerce
has grown considerably over the
past decade and surpassed GBP
1bn in 2015. Local consumers
are increasingly turning to
foreign websites to secure better
prices and purchase products
that are not available, or too
expensive, domestically. The
5 UK Trade & Investment
current government is supporting
crossborder shopping as a way to
lower Koreans’ cost of living and
to tackle the common practice of
domestic importers, distributors
and retailers inflating prices. US
e-commerce sites account for 74%
of all cross-border e-commerce
sales in Korea, while Chinese
sites make up 11%. Within the
EU, Germany is the number one
player with 5.4%. Although the
UK accounts for an impressive
11% of total global Internet
retail sales, only 1.4% of cross-
border e-commerce transactions
conducted in Korea involve the
UK.
Key e-Export Categories
British goods enjoy a strong
reputation among Koreans
and British products are often
marketed in the country with
specific reference to their origin.
Men’s fashion, accessories,
confectionery, home décor,
highend beauty and grooming
products are just a few examples
of the UK’s strengths in retail.
There is a clear overlap in the
areas in which the UK excels and
the products that are increasingly
sought by Koreans looking to
make overseas direct purchases.
Key cross-border categories
include:
• Fashion (premium/mass apparel,
outdoor wear, accessories, etc.)
• Beauty & Cosmetics (small-batch
cosmetics, organic cosmetics,
male grooming, perfumes, etc.)
• Baby products & Toys (organic/
hypoallergenic baby cosmetics,
clothes, educational toys, etc.)
• Food & Beverage (health
supplements, organic food,
confectionery, etc.)
• Home & Living (home décor,
kitchen/tableware, bed/
bathroom accessories, pet
accessories, etc.)
Market Entry Options for
e-Exporters
There is a range of strategies
for UK brands to choose from
in order to address Korean
consumers’ needs directly, some
of which require little effort and/
or investment. On the low-cost
end of the spectrum, it is simply
possible to add a Korea shipping
option at checkout. For an already
growing Korean customer base,
a more targeted approach would
entail website localisation. Beyond
this it may also be worth investing
in a dedicated Korean customer
service centre, as Koreans demand
excellent after-sales service.
Finally, it is possible to explore
hybrid business models that
involve working directly with local
e-commerce platforms that are in
some cases able to be the de facto
distributors in the country.
On the other hand, e-commerce
is increasingly understood to play
a complimentary role to offline
sales rather than replacing brick-
and-mortar sales channels. Korean
consumers, as elsewhere, engage
in webrooming (researching a
product online and the making
the purchase in-store) and
showrooming (visiting a store to
research and select a product
before buying it, usually for a
cheaper price, online). Therefore,
finding a distributor that can
develop the right offline channels
for a company’s products remains
important for increasing both
awareness and trust in a new
foreign brand.
e-Exporting to Korea – A Guide for British Companies6
Korea Overview
Key Points
• Korea is the world’s 11th largest
economy with a GDP of just
under GBP 1tn
• Korea is open for trade. It is
the only country in the world
to have Free Trade Agreements
with the EU, the US and China
• The EU makes up 9% of Korea’s
global trade. The UK is Korea’s
second largest EU trading
partner
• The Korea-EU FTA allows tax-
free imports of products with a
value of less than GBP 104
• Korea’s rising incomes, focus on
convenience, high population
density and world-class Internet
infrastructure underpin a
rapidly growing cross-border
e-Commerce market
Economy
Korea is a dynamic economy
with a GDP of just under GBP 1tn
in 2015. Global names such as
Samsung, Hyundai, Doosan and
LG have powered the country
over the last half century to
become the 11th largest economy
in the world with a GDP per
capita of close to GBP 20,000.
The Korean economy grew by
2.6% in 2015 which, although
good by global standards, is less
than the high single-digit growth
that the economy enjoyed in its
recent past. As the companies
that dominated Korea’s growth
over the last fifty years became
more and more entrenched
across all sectors of the economy,
successive governments have
tried to mitigate the country’s
dependence on a small number of
large conglomerates.
Since the turn of the century,
Korea has placed trade
liberalisation at the forefront of
its foreign policy. The country
has signed more free-trade
agreements (FTA) than any
other and is the only country
in the world to have FTAs with
the European Union, the United
States and China. In comparison
with Japan, which has relied
more on its large domestic
market, Korea has traditionally
been a much more outward-
facing economy and now ranks
as the 7th largest trading nation
in the world. The country’s main
trading partners are China (25%
of total exports and 16% of total
imports), the United States (10%
of exports and 8% of imports)
and the European Union (9% of
both exports and imports).
1
The Korea-EU Free
Trade Agreement
In May 2010 Korea became the
first Asian country to sign a FTA
with the EU. The Korea-EU FTA
was implemented on July 1st 2011.
The majority of import duties
were removed immediately and
the remaining duties, with the
exception of certain agricultural
products, will be eliminated on
July 1, 2016. Since the FTA was
signed, the value of Korean
imports from the EU increased
from GBP 32.7bn in 2011 to
7 UK Trade & Investment
GBP 43bn in 2014. The EU has
become Korea’s third-largest
trading partner and its top foreign
investor.
The UK is Korea’s second largest
export market (GBP 3.99bn) and
its second largest import market
(GBP 5.14bn) within the EU, trailing
only behind Germany. UK exports
to Korea grew by 47.5% between
2010 and 2014. In 2015 Korea was
the second largest market in Asia/
Oceania for UK goods exports
(excluding the logistics hub of
Hong Kong) and a top 20 market
worldwide. The UK’s main exports
to Korea are industrial and B2B
in nature, but retail, led by health
and beauty products, jewellery,
beverages and spirits, is on the
rise.
The Korea-EU FTA allows
products with a value of less
than GBP 104 per shipment to
pass through customs within a
couple of business days, without
additional duties or taxes paid by
the customer. Products valued
up to GBP 1,380 can be imported
by Koreans for personal use with
reduced paperwork. e-exporters
can skip a lot of formalities
required of traditional exporters,
such as product registration,
safety testing, labelling, etc.,
as long as the customer is
importing the product for his or
her own use.
Population and Lifestyle
Korea has a population of just
over 50 million, approximately
half of whom lives in or around
the Seoul metropolitan area.
This area includes Seoul city,
Gyeonggi province that surrounds
the capital city, the port city of
Incheon and satellite cities such
as Bundang and Ilsan. Seoul is
divided by the Han River, with the
old city situated north of the river
and the trendy Gangnam district
located to the south of the river.
Other major Korean cities include
Busan, Daegu and Daejeon.
Korea’s meteoric economic growth
has taken its toll. Koreans work
more than 2,000 hours a year,
which is considerably more than
the 1,669 hours worked by UK
workers.
2
The average woman
in Korea gives birth to just 1.2
children compared to 1.9 children
in the UK.
3
Young Koreans are
getting married later or shunning
marriage altogether. One-person
households account for 25%
of the total and this figure is
expected to climb to 35% by 2035.
While these factors present clear
challenges, they are largely
conducive to a flourishing
e-commerce market. The
extremely high population density
means that 60% of Koreans live
in high-rise apartment buildings,
most of which are equipped
with high-speed broadband
and an office where deliveries
can be received even when the
recipient is at work. Long working
hours mean that convenience is
prioritised and the low birth rate
ensures a greater proportion of
disposable incomes can be spent
on oneself or spread across fewer
children.
e-Exporting to Korea – A Guide for British Companies8
e-Commerce in Korea
Key Points
• Korean e-Commerce was
worth GBP 25bn in 2015 and is
expected to reach GBP 33bn by
2018
• Policy is increasingly favourable
to cross-border e-Commerce – a
great opportunity for British
brands
• British brands can both e-Export
and maintain a separate in-
country offline distribution at
the same time – parallel import
policy allows for more flexibility
in developing sales channels
• m-Commerce accounts for the
majority of online sales – a good
mobile experience is key
• Koreans generally use credit
cards for cross-border
e-Commerce but mobile
payments are growing
• The Korean consumer is used to
quick deliveries and a very high
level of customer service
• The dominant e-Commerce
websites in Korea include
Coupang, Gmarket and Auction
3.1. Market Overview
Korea is the world’s 7th largest
e-commerce market and APAC’s
3rd largest e-commerce market
after China and Japan. The
industry was worth GBP 25bn
in 2015, up 11% from 2014
4
and
expected to grow to GBP 33bn
by 2018.
5
e-Commerce sales
volume accounts for 9.8% of
the country’s retail sales and it
is believed that this number will
grow to 12% by 2017.
6
The Struggles of Global
e-Commerce Brands
Koreans lean strongly towards
solutions that are designed
for Koreans and in the Korean
language. Global e-commerce
companies have struggled in
Korea, despite their vigorous
marketing efforts. Yahoo stopped
producing online content after
struggling against local Internet
companies such as Naver and
Daum. Naver and Daum also
dominate the local search engine
market, dwarfing the global
giants, Google and Yahoo.
7
Similarly, global brands such as
eBay and Groupon struggled
to penetrate the Korean
e-commerce market and had to
Figure 1: Retail and e-Commerce Sales Growth
300
275
250
225
200
175
150
125
100
75
50
25
0
2012
2013
2014
2015
2016
2017
2018
Retail e-Commerce sales (GBP bn)
Total retail sales (GBP bn)
Source: eMarketer
e-Exporting to Korea – A Guide for British Companies10
resort to acquiring local players.
Groupon, the American company
best known for its “flash sales”,
closed down its Korean subsidiary
after failing to compete against
the three domestic players,
Ticket Monster, Coupang and
WeMakePrice. Groupon then
bought Ticket Monster for GBP
180mn in 2014 only to resell its
46% stake in April 2015.
8
eBay
followed a similar path. Unable to
leverage its globally recognised
brand in Korea, the company
acquired Auction in 2001 and
then Gmarket in 2009 for GBP
830mn.
9
Amazon, another global
e-commerce behemoth, despite
being one of the most visited
non-Korean websites, only
opened its Korea office in late
2015. Amazon Korea focuses
on outbound sales of Korean
products. An Amazon Korea
insider stated that Amazon.com
has steady traffic amongst
consumers based in Korea, but
not enough of it to justify opening
a full Amazon.co.kr website. It
is up to merchants on Amazon
whether they want to ship to
Korea or not.
Domestic e-Commerce
platforms are run by Koreans
for Koreans, are fully localised,
available in both desktop and
mobile, work closely with local
telecommunication companies to
improve the mobile experience
and work with domestic credit
card companies to provide
discounts and loyalty benets. It
is a tightly-knit ecosystem that
foreign e-Commerce platforms,
such as Amazon, may nd
challenging to break into. UK
retailers should focus on utilising
locally-established channels or
specialised online malls.
Senior Manager – Amazon Korea
3.2. Key Characteristics
3.2.1. Policy
Recognising consumers’ growing
interest in e-commerce, the
current Korean government is
pushing to deregulate the digital
environment. On the one hand,
Korea has traditionally been a
market of high consumer prices
often caused by import and sales
channels that were dominated
by Korean conglomerates. The
conglomerates enjoyed exclusive
distributorship agreements
that allowed them to maintain
high margins. Under pressure
from increasingly well-informed
consumers, the government has
started to ease direct purchases
from overseas as a way to ease
the average Korean’s living
expenses.
10
Indeed, foreign
brands can now utilise parallel
exports to Korea: they can have
an offline in-country distributor
while continuing to sell directly
to consumers via their global
shopping websites.
Also in recent years Korea
has emerged as a cultural
powerhouse and Korean films,
dramas and pop music have
become staggeringly popular
across Asia. This has presented
many opportunities for Korean
companies looking to sell
products and clothing that
feature in the country’s exported
content. Foreigners spent GBP
208mn on Korean e-marketplaces
in 2013 and this figure rose
by 56.8% to GBP 335mn in
2014.
11
However, until recently
no transaction could be made
on a Korean website without
a certificate of authentication
which required the Active X add-
on to Internet Explorer. Other
browsers (e.g. Firefox, Chrome)
were not compatible and there
was no way to simply type in a
credit card number, CVV code and
authorise purchase. Not only did
11 UK Trade & Investment
this greatly hinder cross-border
e-commerce it also stunted
the growth of digital payment
systems. The Korean government
announced in March 2015 that it
would abandon the mandatory
use of the system in the hope of
spurring cross-border trade.
3.2.2. The Consumer
Koreans are demanding
customers who represent two
seemingly conflicting buying
behaviours: bargain seeking
to save money and a strong
preference for superior product
quality. Online retailers generally
target young mums, young adults
in their 20-30s, and middle-aged
females in their 40-50s.
12
These
shoppers’ buying preferences
are mainly influenced by local
celebrity endorsements, TV drama
and movie endorsements, social
media word-of-mouth, discussion
boards, TV commercials and social
media campaigns.
13
According to
Korean credit card operators, men
tend to spend 15% more money
online across fewer transactions,
while women shop online more
often but generally buy things
that are less expensive.
14
50% of
Korean respondents in Nielsen’s
2016 survey on e-commerce said
they had purchased something
online in the last 6 months. The
corresponding figure for Korea’s
neighbour, Japan, was 32%.
15
The average Korean household
has GBP 2,225 of disposable
income each month, of which
GBP 1,756 is spent and the rest
is saved or invested. Living
expenditures account for GBP
1,334 (while GBP 322 is paid in
taxes), and these include GBP
176 on food and beverages,
GBP 83 on clothing, GBP 54 on
household items and around GBP
120 on other goods and services.
UK exporters can therefore
target a share of about 32.4%
of the average household’s total
monthly living expenditures, or
about GBP 426.
16
3.2.3. m-Commerce
The Korean government has
made investment in the Internet
a national priority since the early
1990s and the country is well
known for its leading position
in broadband penetration and
download speeds. The country
records average download speeds
of 20.5Mbps, which is the fastest
in the world. By comparison,
Japan records average download
speeds of 15Mbps while the UK
averages 13Mbps.
17
Korea has also long been at the
forefront of mobile technology,
both in relation to handsets and
the supporting network, and
80% of the population uses
a smartphone. The average
Korean owns 2.3 mobile devices,
browses e-commerce websites on
mobile at least once a week, and
completes 60-70% of his or her
purchases on a mobile device.
18
In
fact, some local companies record
as much as 70-75% of their
transactions being completed
on mobile. Forty-five percent of
e-commerce transactions are
made by smartphones in Korea
versus 41% in Japan and 18%
in the UK.
19
Furthermore, retail
mobile conversion rates are two
times higher in South Korea
(6.7%) than the UK (3.2%).
This may be due the fact that
largescreen phones (phablets)
that offer a better shopping
experience are extremely popular
in Korea, but also suggests that
the mobile experience is well-
designed to get consumers
from browsing to checkout
seamlessly.
20
3.2.4. Payments
Credit cards are by far the most
common payment method in
Korea with 74% of all online
transactions being settled by
card versus the global average of
53%.
21
Koreans own four credit
cards on average, the most in the
world and more than 3 times as
many as the average UK citizen
(1.2).
22
The vast majority of
Korean consumers use domestic
credit cards that are tied to the
international payment processing
networks of Visa, MasterCard
and American Express. The fact
that Korean consumers prefer
e-Exporting to Korea – A Guide for British Companies12
to pay online with credit cards is
favourable to British e-exporters
as it makes the payment process
straightforward. In this respect,
Korea stands in stark contrast to
the Chinese market where most
e-commerce payments are either
cash-on-delivery (COD) or made
using country-specific 3rd party
online payment systems (e.g.
Alipay), and only 5% of 4.2 billion
cards in circulation are Visa or
MasterCard.
23
While credit cards are
overwhelmingly dominant
in Korea, with the recent
abolishment of the authentication
process requiring Active X,
payment methods such as PayPal
and Alipay have started to gain
some traction. Mobile payments
are also growing in popularity.
24
Korean enterprises are now
offering easy-to-use mobile/online
payment services. For instance,
mobile wallets such as Kakao
Pay or Naver Pay now allow for
credit/debit card information to
be stored on users’ smartphones
allowing for instant payment both
online and offline.
3.2.5. Delivery
Delivery speed is extremely
important to Korean online
shoppers and even the
tiniest delay can result in
dissatisfaction, complaints
and negative online reviews.
e-Commerce companies
recognise this fact and are
exploring the use of in-house
delivery systems rather than
relying on traditional delivery
companies. This way they can
guarantee delivery terms and
timelines, as well as better
manage exchange and return
requests. Coupang started this
trend and, based on its success,
the rest of the industry seems
to be following suit.
3.2.6. Customer Service
Most of the large e-commerce
platforms in Korea have reached
18-20 million registered users
and 30,000-50,000 vendors.
Executives from eBay Korea,
Coupang and 11th Street all
agree that the time when
they could compete on prices
and promotions is over and
now the only way to both
boost new growth and retain
existing customers is to provide
better customer service than
the competition. Same-day
delivery, hassle-free returns
policies, 24/7 call centres with
personalised support are just
a few examples of how these
companies compete for the
modern Korean e-commerce
customer.
Industry Insider’s Tip
Coupang offers in-house, next day delivery of some
commodities such as water, milk, toilet paper, baby nappies,
etc. and a selection of their other best-selling products. The
service is called Rocket Delivery and is akin to Amazon Prime.
Korean Internet chatrooms and blogs are abuzz with talk of
“Coupang Men”, praising their extra-efficient delivery service,
cheerful demeanours and flexibility. Other e-Commerce
companies are working on replicating this model. e-Commerce
insiders claim that since it is hard to compete on prices of
commodities, it makes more sense to compete on customer
service (e.g. fast free delivery, easy refunds/returns, etc.)
UK Trade & Investment 13
CLOSER LOOK
Strawberry Net offers tax
refunds to Korean customers.
If the perfumes/cosmetics
ordered by the customer
are subject to additional
taxes, the customer can
send the receipt and get
a refund directly to the
credit card they used for
payment. Strawberry Net
does it voluntarily – a show
of goodwill – and does not
guarantee returns every
time. The company found
that Korean consumers like
this extra cushion very much
and come back to them more
often.
Korean laws relating to
e-commerce stipulate that
vendors shall provide refunds
if products ordered are not
received, or if the product is not
in keeping with the way it was
advertised on the website. This
applies to both independent
online vendors operating
their own sites and those
vendors using open market
platforms such as Gmarket. UK
e-exporters are governed by
UK laws pertaining to business
conduct in e-commerce and can
therefore handle complaints,
refund/exchange requests
according to the UK regulations
and their own policies, to
which users agree when
purchasing goods. It is strongly
Industry Insider’s Tip
Most successful e-Exporters to Korea do not charge customers
shipping fees on return/exchange, respond to inquires very
quickly and do not ask too many questions. Korean customers
generally expect that if, for instance, they did not like the colour
of the product when it arrives, that is reason enough for the
vendor to grant a free-of-charge return/exchange. Also, complaint
handling can be a frustrating experience for both the seller and
the buyer if the process is not conducted in Korean.
recommended, however, that
e-exporters provide a high
level of customer support
to meet the expectations of
Korean consumers and to
ensure that negative feedback
is not circulated on the Korean
Internet – something that it is
difficult for an e-exporter to find
out about or remedy.
3.3. Open Markets
As elsewhere, there are two
main online sales channels
in Korea: open markets and
online shopping malls. An
open market is a website that
serves as an e-commerce
platform for vendors of all sizes
to display their products and
connect with consumers. These
platforms help facilitate online
transactions, taking a fee –
usually a percentage of the sales
value – from the vendor in return.
This is the model employed by
companies such as eBay and
Alibaba.
Interpark, established in 1996, is
generally considered the pioneer
of Korean e-commerce. A second
generation of e-commerce
retailers – open market platforms
such as Gmarket and Auction –
came to dominate the landscape
in the early 2000s. Since
2010, online retailers such as
Coupang, Ticket Monster, and
WeMakePrice, initially borrowing
from Groupon’s social commerce
concept, have emerged as the
sector’s heavyweights. These
companies soon evolved into
e-commerce companies more
akin to Amazon, in that they
combine an online shopping mall
with an open market, offering a
platform for independent vendors
but also carrying own their stock
of the most popular products and
brands.
14 e-Exporting to Korea – A Guide for British Companies
Coupang is a rising star not only
of online retail, but of the tech
industry in Korea as a whole. It
was able to reach GBP 690mn
(USD 1bn) in gross merchandise
value in only 13 quarters from its
inception in 2010, becoming the
fastest e-commerce company
in the world to achieve that
figure. Coupang is now moving
away from social commerce and
transforming itself into “Korea’s
Amazon”. Coupang is currently
focused strongly on growth
rather than profits. The company
received an investment from
Softbank of GBP 700mn in 2015,
which valued the company at
close to GBP 3.5bn.
Korean consumers often engage
in pre-purchase research to
aid in their decision-making
process. Some research tools
include price comparison services
such as Naver, direct dialogue
with sellers via website Q&A
sections, information exchange
with other users via message
boards, and visiting physical
locations where products are
displayed (showrooming) before
buying online. Webrooming –
the practice of doing product
research online to complete the
purchase in a brick-and-mortar
store – is also increasingly cited
as a buying pattern and 37%
of Korean consumers said that
they conducted online research
before buying groceries offline in
2014.
25
One reason for this is that
online store product descriptions
have the amount of detailed
information rarely attainable
offline, unless experienced sales
staff can be questioned.
In terms of local online shopping,
the most popular product
categories are clothes and
fashion accessories (18%),
travel and entertainment (17%),
home and car accessories
(12%), computers, computer
parts and accessories (11%)
and food (8%).
26
These are the
products, either domestically
manufactured or imported, that
tend to be widely available for
purchase offline as well, but
people choose to buy them
online for convenience or price
competitiveness. More and more
Koreans are choosing to buy
commodities this way.
UK Trade & Investment 15
Key Player Profiles
3.3.1. Gmarket (eBay)
Website global.gmarket.co.kr
Established 2000 Employees 899 Revenue (2015) GBP 482mn
Overview • The open market leader, focused on fixed-price sales. A subsidiary of eBay Korea,
the site has a 38.5% market share, a total of 70,000 registered vendors, 19 million
registered users and sees millions of transactions each month
• Gmarket mostly caters to Korean consumers but the website offers limited availability
in English and Chinese. It offers international shipping to over 50 countries
• Gmarket is integrated with other Korean web services. It is possible to search for
Gmarket items directly via Korea’s largest search engines – Naver and Daum
• Gmarket’s revenues come mainly from sellers, who pay (1) a fee based on an item’s
selling price, (2) a fee based on the starting price, and (3) an advertising fee. The sales
fee (5-8%) is negotiable and can add up to 10-15% with other fees
• Gmarket is investing into new revenue streams – reselling, same-day delivery, etc.
3.3.2. Auction (eBay)
Website www.auction.co.kr
Established 1998 Employees 899 Revenue (2015) GBP 482mn
Overview • As a subsidiary of eBay Korea, Auction is one of the biggest open markets in Korea
with a 26% market share and a total of 20 million users
• Auction started as Korea’s first online auction marketplace but the model is losing
popularity relative to the discount-based fixed price model
• With 20 different categories offered, Auction also features the $1 auction,
a co-auction, a second-hand marketplace, and luxury items section
• Auction partners with certain Korean companies, such as department stores and
electronics companies, to offer them a separate branded corner on its website
e-Exporting to Korea – A Guide for British Companies16
3.3.3. 11th Street (11ST)
Website english.11st.co.kr
Established 2008 Employees 800 Revenue (2014) GBP 828mn
Overview • Owned by SK Planet and part of the SK Group, 11th Street is the only domestically
owned and funded e-commerce marketplace in Korea
• 26.1% market share, 22,000 registered vendors and 21 million registered users
• The website is offered in English and Chinese, and has a branch in Malaysia
• 11th Street takes margin from sellers which is usually between 6-7% (with marketing
fees this can be climb to 15%)
• 11th Street acts as a vendor for some of the most popular products, which it buys in
bulk and ships from its domestic warehouse
• 11th Street provides a variety of partner discount and loyalty programs in association
with its mother company SK Telecom
• 11th Street also offers worldwide shipping services to more than 50 destinations
3.3.4. Coupang
Website www.coupang.com
Established 2010 Employees 1,200 GMV (2015 est) GBP 2bn
Overview • Coupang is the world’s fastest-growing e-commerce company that grew to GBP 690mn
of gross merchandise value (GMV) from Q1 2011 and Q3 2013
• 55.2% of social commerce market share
• The company started as a Korean equivalent of Groupon, but quickly expanded to
partnering with independent merchants and reselling physical goods
• Coupang currently offers a curated selection of diverse merchandise, including baby
goods, fashion, beauty products, consumables and home goods
• Coupang, with its subsidiary Coupang America, offers a Coupang Global service
whereby it purchases popular products in bulk in the US and sells them to Korean
customers via with a guaranteed “within 5 days” delivery
• Coupang offers a domestic same-day delivery service (Rocket Delivery)
• Mobile sales account for more than 50% of sales and 70% of transactions
• The company’s is valued at GBP 3.5-4.8bn and has taken investment from Softbank
UK Trade & Investment 17
3.3.5. WeMakePrice
Website www.wemakeprice.com
Established 2010 Employees 1,200 Sales (2015) GBP 1.4bn
Overview • Formerly known as Namu Internet, WeMakePrice is the second-largest social
commerce website with 19.9% of social commerce market share
• WeMakePrice puts special emphasis on items and services including restaurant
coupons, spas/aesthetic treatments, exhibits, and travel packages
• Unlike other social commerce companies in Korea, WeMakePrice is actively engaged
in holding public events such as Beauty Fairs that feature popular domestic cosmetics
brands and tutorial sessions with famous makeup artists
3.3.6. Ticket Monster
Website www.ticketmonster.co.kr
Established 2010 Employees 1,000 Sales (2014) GBP 967mn
Overview • Ticket Monster (abbr. TMON), along with Coupang and WeMakePrice, is a leading social
e-commerce company with 24.9% market share in Korea
• The company operates in three main verticals: Goods, Local and Travel, and offers
over 47,000 Stock Keeping Units (SKUs) through various partnerships with 15,000
merchants
• In 2014, 70% of TMON’s transactions were completed on mobile devices and its
customer base continued to expand into multiple age segments
• In 2015, private equity investor Anchor Equity Partners and KKR acquired a controlling
stake of Ticket Monster from Groupon
3.3.7. Naver Corp
Website shopping.naver.com
Established 1999 Employees 2,204 Revenue (2014) GBP 2.2bn
Overview • Naver Corporation is a Korean Internet content service provider and developed Korea’s
first indigenous search engine in 1999 (now over 80% market share)
– Naver’s services also include digital maps and instant messaging
• Naver launched its mobile shopping platform in 2015
• Naver Pay, makes Naver a one-stop platform for mobile shopping
• Naver launched “Global Window” in January 2016, where it introduces foreign
products and SME merchants from overseas who offer shipping to Korea
– Currently focuses on products from UK, France and Germany
– Five main product categories: fashion, beauty, living, kids and F&B
– Customer service (Q&A, Shipping, Return, etc.) all in Korean
– Shipping costs depend on sellers. Standard rate from UK is GBP 10
18 e-Exporting to Korea – A Guide for British Companies
3.4. Online Shopping Malls
Online shopping malls are
websites operated by brands
that carry an assortment of
that company’s own products
or private labels and are usually
designed as an addition to an
existing bricks-and-mortar retail
operation. Online malls can also
be shopping websites operated
by large retailers carrying
an assortment of products
provided by different brands
and vendors. In both cases the
website operator keeps stock of
the goods that it sells. Examples
of online shopping malls include
The Body Shop and Shinsegae
Online Mall.
Large traditional retailers
such as Shinsegae, Hyundai
Department Store and Lotte,
have been playing catch-up
with Internet-only retailers for
e-commerce market share. While
still small relative to e-commerce
companies in terms of online
sales market share, they operate
their own online malls and work
with open markets, registering
as “Premium Vendors”. One of
the more common tactics that
these companies employ is to
consolidate multiple existing
e-commerce sites that they
operate (e.g. separate grocery,
premium fashion and home
shopping sites) into single online
offerings.
Shinsegae Group
Korea’s oldest department
store and largest hypermarket
chain was formerly part of the
Samsung Group. The Shinsegae
Group consists of Shinsegae
Department Store (10 stores,
luxury brand positioning), Emart
(137 super and hypermarkets
accounting for over 50% of the
group’s revenue), Shinsegae
Food (importer and distributor of
foods), Chosun Hotel, Starbucks
Korea and other subsidiaries.
The group recorded combined
revenues of GBP 13.3bn in 2014.
SSG.COM (www.ssg.com): Owned
by the Shinsegae Group, SSG.
COM is an online shopping mall
where consumers have access
to a number of Shinsegae-
owned shopping malls, including
Shinsegae Mall, Shinsegae
Department Store, Emart Mall,
Emart Traders and Boons
Apothecary.
Lotte Group
Subsidiaries of the Lotte Group
include Lotte Department Store
(31 stores, 48% market share),
Lotte Mart (114 stores), Lotte
Chilsung (soft and alcoholic
beverage manufacturer and
licensor), Lotteria (Korea’s top
fast food franchise), Lotte Hotel,
Lotte World (amusement park),
Toys”R”Us and many others. The
group’s combined revenues in
2014 were GBP 38bn.
Ellotte (www.ellotte.com):
Launched in 2013, Ellotte is an
online shopping mall owned by
Lotte Department Store. It differs
from Lotte’s other online malls in
that it only carries products from
Lotte Department Stores along
with newly launched premium
brands.
LOTTE.COM (www.lotte.com):
Launched in 2000, LOTTE.COM
is Lotte Department Store’s main
online shopping mall, offering
products from its department
stores as well as individual sellers.
Lotte Homeshopping
(www.lotteimall.com): Launched
in 2001, Lotte Homeshopping
operates its online mall, Lotte
iMall, offering products sold via
TV home shopping as well as
online catalogues.
Hyundai Department
Store Group
The Hyundai Department Store
Group (HDSG) deals with retail
and distribution of food and other
products, food manufacturing,
food services, media and
entertainment, logistics, finance
and IT services. The company
currently operates two online
shopping malls that are designed
to appeal to the premium market.
The group’s combined revenues
were GBP 6bn in 2014.
The Hyundai
(www.thehyundai.com): Launched
19 UK Trade & Investment
in January 2016, The Hyundai
offers nearly all products from
both Hyundai Department Store
and Hyundai Homeshopping.
The difference is that the users
of Hyundai Credit Card get
additional benefits.
Hyundai Hmall
(www.hyundaihmall.com):
Owned by Hyundai
Homeshopping, Hyundai Hmall is
a shopping mall focused on items
traditionally sold via TV home
shopping, a market that is still
large in Korea.
GS Retail
GS Retail (www.gsshop.com) is a
subsidiary of the GS Group, one
of Korea’s largest conglomerates
and formerly part of the LG
Group. GS Retail focuses on
medium and small-size retail.
They have a network of over
8,000 GS25 convenience stores,
260 GS Supermarkets and 105
Watson beauty stores (a 50-50
joint venture with the Hong Kong-
based health and beauty chain).
The group’s 2014 revenues were
GBP 350mn.
CJ Group
Originally the food manufacturing
division of the Samsung
Group, CJ is now a formidable
retail player, especially in
pharmaceutical, cosmetics and
F&B. The CJ Group operates the
nation’s largest pharmacy chain
– Olive Young – with over 460
stores nationwide. It also operates
an online mall (www.cjmall.com)
with a variety of products and
membership benefits. The group’s
revenues reached GBP 11bn in
2014.
e-Exporting to Korea – A Guide for British Companies20
Cross-border Online Shopping
Key Points
• Korea’s cross-border
e-Commerce industry reached a
value of GBP 1bn in 2015 and is
estimated to be worth GBP 6bn
by 2018
• Key Korean cross-border
e-Commerce categories include
fashion, cosmetics, baby
products, food & beverage, and
home & living
• The UK accounts for 1.4% of
cross-border online shopping
shipments to Korea – there is
huge untapped potential for
British brands
• The Korea-EU FTA, signed in
2011, ensures British brands
are well placed to exploit this
market
4.1. Market Overview
Figure 2: Cross-border e-Commerce Market
While many global brands in
Size (GBP)
areas such as fashion, food
2018 (est)
and beverages or beauty
and cosmetics have enjoyed
popularity amongst Korean
consumers since as far back as
the 1980s, small and medium-
sized retailers were, until
recently, at a disadvantage
due to geographical and sales
channel barriers. The value of
cross-border online shopping
exceeded GBP 1bn in 2015, a
six-fold increase compared to
GBP 302mn in 2011.
27
This value
of the industry is expected to
reach GBP 6bn by 2018.
28
With
the growth and diffusion of the
Internet, inexpensive shipping
methods, and the help of EU-
Korea Free Trade Agreement,
British retailers of all sizes
can now address Korean
consumers’ needs directly.
2015
2011
bn 0 1 2 3 4 5 6 7
Source: Hyundai Research Institute
The UK accounts for only 1.4%
(219,000 of customs clearances in
2015) of the total purchases from
overseas websites – a number
which could be significantly
higher and suggests that there
are huge opportunities in cross-
border e-commerce for British
brands.
29
In a poll conducted by a
Korean economic newspaper in
2015, only 14.6% of respondents
replied that they had made a
purchase directly from the UK
versus 95% from the US.
30
UK Trade & Investment 21
Figure 3: Overseas Direct Purchase Clearances
by Country (% of Total)
USA
China
Germany
Hong
Kong
Japan
UK
France
Other
%
Percent
0 20 40 60 80 100
Industry Insider’s Tip
The practice of importing products from abroad for personal
use via e-Commerce is called “jik-gu”, which translates to
“direct purchase”. There are many chatrooms and forums on
the local Internet where Koreans share their experiences of
using foreign websites, and discuss product selections and
prices. Products bought this way for one’s own use do not
need to be safety-tested, equipped with a local language label
or locally certified. However, they can be subject to additional
duties and taxes.
Source: Korea Customs Service
Korean consumers can engage
in overseas direct purchasing in
three main ways:
• Use local e-commerce websites
that facilitate transactions with
foreign vendors, usually via local
agents (Gmarket, 11th Street,
Ticket Monster, etc.)
• Use buying agents that
purchase products overseas and
ship them to Korea (Poombuy,
Wizwid, etc.)
Figure 4: Product Categories Purchased
Directly from Overseas (% of Total)
Dietary supplements
& Vitamins
Clothing
F&B
Cosmetics
Shoes
Accessories
Baby products
& Toys
Electonics
% Percent
0 5 10 15 20
Source: Korea Customs Service
addresses (warehouse) in the seller’s
country and handle international
shipping to Korea at a fee. These
services are still operational (those
shopping on Amazon.com and eBay.
com still often use shipping agents
as not all merchants offer shipping
to Korea), but have suffered as more
Koreans purchase products directly
from overseas sites and more
foreign websites offer affordable
worldwide delivery options.
Based on a poll run by MBN News,
the most common reasons for using
cross-border online shopping are:
• Cheaper price (71.4%)
• Use local or global shopping
malls and e-commerce platforms
(Coupang, Amazon, etc.)
Koreans have been using foreign
websites to shop online since the
mid-2000s. Originally it was a
niche sector dominated by buying
agents (Poombuy, Wizwid, etc.),
who buy and ship products from a
foreign country on the customer’s
behalf, and shipping agents (Malltail,
iPorter, etc.) who provide shipping
• Brands not available in Korea
(20.6%)
• Larger variety of products
available (5%)
• Better quality of products (i.e.
lower likelihood of counterfeit
products) (3%)
31
e-Exporting to Korea – A Guide for British Companies22
According to one market
research company, in 2015 the
most frequently used overseas
e-commerce websites by Koreans
were:
1. Amazon.com (all categories)
2. eBay.com (all categories)
3. iHerb.com (dietary supplements,
functional food)
4. Shopbop.com (female fashion)
5. 6pm.com (apparel, shoes, bag,
accessory)
6. Amazon.co.jp, DrugStore.com,
Walmart.com, Rakuten.com and
others
32
In 2015 Coupang emerged as
the main disruptor on the cross-
border online shopping scene.
A Coupang executive explained
that to keep up with the cross-
border trend, the company
has established a warehouse
and buying offices in California
where they directly approach
manufacturers of the top 6,000
products that Koreans buy from
US websites (eBay, iHerb, Amazon,
etc.), buy the products in bulk and
sell to Korean consumers through
their online storefront. Since the
products go directly to consumers
using standard international
shipping (maximum GBP 144,
in accordance with the U.S.-
Korea FTA), Coupang does not
have to deal with safety testing,
registration or complicated
customs procedures. This model
Figure 5: Korea’s e-Commerce Landscape
e-Commerce Facilitating Services Payment
Local e-Commerce
platforms
Search engines Local credit card
companies
• Gmarket
• Naver
• Shinhan Card
• 11th Street (11ST)
• Daum
• KB Kookmin Card
• Auction
• Google
• Hyundai Card
• Coupang
• Bing
• Samsung Card
• Ticket Monster
• Lotte Card
(TMON)
• KEB hana Card
• WeMakePrice
Global e-Commerce
platforms
Local couriers Bill to mobile
• Amazon • Korea Post
• eBay • CJ Korea Express
• Hanjin
• Hyundai Logistics
• Logen
• Ilyang Express
• SK Telecom
• Korea Telecom
• LG U+
Local online
shopping malls
Global couriers Mobile Payment
System
• Shinsegae
• Royal Mail
(SSG.com)
• DHL
• el Lotte
• FedEx
(ellotte.com)
• UPS
• GS Shop
• Hmall
• KakaoPay
• Samsung Pay
• Naver Pay (N Pay)
Global online
shopping malls
Shipping agents Global payment
processors
• iHerb
• malltail • VISA
• ASOS (asos.com)
• iPorter • MasterCard
• Strawberry Net
(strawberrynet.com)
• Shopbop
• American Express
• JBC
Buying agents
is now being replicated by Ticket
• Poombuy
Monster, 11th Street and Gmarket.
• Wizwid
UK Trade & Investment 23
CLOSER LOOK
Ticket Monster is keen
to work on establishing
purchasing teams and
warehouses in the US
and Europe - potentially
the UK. Ticket Monster
is interested in working
more with European
brands as it recognises
Coupang’s relative strength
in understanding the US
market and its products.
In the near future Ticket
Monster would like to
become Korean consumers’
main supplier of and channel
to premium European goods.
4.2. Key e-Export Categories
Based on interviews with
executives from Korea’s key
retail groups and e-commerce
companies, the most attractive
sectors in e-commerce for British
retailers include Food & Beverage,
Beauty & Cosmetics, Fashion,
Baby Products & Toys, and
Home & Living. That is not to say
that these are the only sectors
worth exploring but generally
fast moving consumer goods
are well suited for cross-border
e-commerce. There are only three
countries in the world where
e-commerce accounts for more
than 4% of all FMCG market: UK
(6%), France (4.3%) and South
Korea (13.2%). The figure for
Korea is expected to grow to 30%
by 2025. All of these sectors have
different competitive landscapes
and offer different opportunities
and challenges.
4.2.1. Food & Beverages
The food and beverage industry
may be one of the most
interesting yet challenging
industries in Korea for foreign
brands to find their place. Food
and beverage currently comprises
nearly 14% of all overseas direct
purchases in Korea and local
market experts still see significant
growth potential. Cross-border
e-commerce in F&B has its
obvious limitations, but most
products that are not quickly
perishable can be traded this way
without particular restrictions.
Vitamins, Dietary Supplements
and Functional Foods
There is a heavy emphasis
among the Korean public on
healthy eating. Koreans purchase
substantial amounts of functional
food online via websites such
as iHerb.com, Amazon.com or
Coupang.com. Sales of dietary
supplements and functional
foods, which include fish oil,
anti-oxidants, and vitamins,
were worth GBP 160mn in 2015.
The demand for regular foods
that are associated with health
benefits, such as organic food,
blueberries, and quinoa, have also
increased dramatically. In January
2016, 15 of the top 20 bestselling
goods on Coupang’s “Coupang
Global” subsection were health
supplements and vitamins, three
were sauces and spices, with
cosmetics making up the final two
products.
Koreans are crazy about healthy
food, such as vitamins, sh oil,
protein powders, kale chips and
other functional foods. We saw
the growing popularity of global
e-marketplaces and eectively
decided to become one for our
Korean customers. We built our
warehouse in California to stock
up on products and ship them to
our customers while still oering
Coupang’s familiarity and the
highest level of customer service.
Every month we look at the top
6,000 best selling products on
top 10-20 American websites,
and buy as many of those
products as we believe we can
resell to Korea.
Senior Director – Coupang
-
e-Exporting to Korea – A Guide for British Companies24
It should be noted, however, that
the Korean F&B market can be
Characterised by dietary fads.
Greek yogurt, gluten-free pasta,
probiotics, cleansing juices
and bubble teas are just some
examples of short-lived crazes
that come and go on a seemingly
random basis. Typically, these
fads appeal to large portions of
the consumer base (larger than in
the west) for a short time (shorter
than in the west). Dietary fads
sweep the market and disappear
completely usually on 3-to-6-
month cycles. They offer both a
big opportunity for fast-movers,
but also can be the undoing of an
overconfident retailer.
CLOSER LOOK
A prime example of a short
lived fad in Korea is the
“Kkokkomyeon” craze that
elevated a minor player,
Paldo, to the domestic
market leader briefly in the
late 2011. Released in August
2011, Kkokkomyeon was
an instant noodle product
created by a popular Korean
comedian together with
Paldo. The product gained
sensational popularity with
over 100 million packs sold
within the first five months.
However, as the buzz
subsided, sales fell sharply
to just 14 million packs by
February 2012.
Sweets, Desserts and
Confectionery
Notwithstanding Koreans love
for healthy foods, cross border
e-commerce has also seen
an increase in thepopularity
of sweets, snacks and other
similar products. Accompanying
the astonishing popularity of
coffeeshops, cafés and bakeries
in Korea, offline sales of sweets,
cakes, cookies and other desserts
have beengrowing at a double-
digit pace over the last five years.
But Koreans’ sweet tooth is
evolving, and so are theways their
cravings can be satisfied.
Due to the increasing demand
for high-end desserts among
Korean consumers, famous
and upscale foreign desserts
brands (Magnolia Bakery, Joe
& The Juice, Mont St. Clair,
etc.) have entered the Korean
market, usually through
a partnership with local
department stores. We have
seen a 300% growth in sales in
recent years. Now is the time to
make it available to even more
people via e-Commerce and
we are working on a same-day
delivery service to facilitate it.
Dessert Category Buyer –
Hyundai Department Store
The most popular products
imported from overseas in
this category in January 2016,
based on combined statistics
from Coupang and iHerb, were
crisps, nachos, organic chocolate,
multigrain cookies, waffle/pancake
mixes, lozenges and sweet
waffle/pancake sauces. Based
on industry insiders’ comments
and cross-referenced with cross-
border e-commerce website
statistics, British e-exporters
could also see opportunities in
the following product areas: black,
green and herbal teas, jams and
preserves, spices, condiments
and sauces and nuts, nut butters,
dried fruit and spreads.
4.2.2. Fashion
Fashion is one of the most popular
categories in cross-border online
shopping in Korea, accounting
for 16% of all overseas direct
purchases in 2015. According to
Nielsen, 77% of South Koreans
claim to have bought clothes
online in the past year, which is
more than any other country (the
corresponding figure for the UK
is 67%).
33
Koreans largely engage
in direct overseas purchasing
of clothes and accessories not
because the brands are not
available in Korea, but because
they cost less overseas –
consumer prices in this category
are perhaps the most inflated of
all – and are available in a wider
selection.
UK Trade & Investment 25
Sportswear and Outdoor
Sports and outdoor wear accounts
for 26% of Korea’s apparel
industry and outdoor brands
from abroad are popular among
consumers. With a growing interest
in a diverse range of sports and
activities (e.g. soccer, hiking,
golfing, biking, camping, etc.), the
demand for sportswear that is
functional yet versatile enough to
adjust to different types of weather
and activities has increased.
CLOSER LOOK
New Balance
(www.newbalance.com), the
American sportswear brand,
is immensely popular in
Korea amongst teens and
people in their twenties. The
product available in Korea
is manufactured in China
and Southeast Asia under
the licence by the E-Land
Group. While offline sales of
the brand are strong, more
and more Korean consumers
are turning to cross-border
e-commerce seeking a wider
selection. New Balance
footwear purchases from
the US are continuously
near the top of most popular
e-commerce websites such
as Gmarket, 11th Street,
Auction and Coupang.
Watches, Accessories
and Jewellery
Traditionally most designer
watches and jewellery in Korea
were sold in department stores
with high levels of customer
service but also very high sales
margins. Korean consumers now
seek cheaper options on cross-
border e-commerce websites.
Products from this category
regularly appear near the top of
crossborder e-commerce websites
in Korea. Other popular products
include wallets, belts, purses,
suitcases, etc.
Good examples of overseas
fashion brands and retailers
e-exporting to Korea include:
• Pandora (US) (www.pandora.net)
• Daniel Wellington (EU)
(www.danielwellington.com)
• Jomashop (US)
(www.jomashop.com)
Casual Wear
Seoul is considered one of the
most fashion-forward places in
Asia.
34
People often look online
not only for brands they know
and like but also for new items to
add to their wardrobes. Brands
like Abercrombie & Fitch or
Polo Ralph Lauren are some of
the bestsellers. Some notable
examples of casual fashion
websites popular in Korea are
Shopbop (www.shopbop.com)
and 6PM (www.6pm.com). One
of the most interesting success
stories in this category is ASOS,
a company that has a partially
localised website , dedicated
Korean support staff and engages
in a range of localised marketing
events.
e-Exporting to Korea – A Guide for British Companies26
CLOSER LOOK
ASOS (www.asos.com)
generally targets young,
empowered females that
are active on social media.
The company reached out
to Pikicast, a Buzzfeed-
like website in Korea, and
offered special discount
codes for their readers. It
successfully raised its brand
awareness among Korean
consumers by directly
engaging them via relevant
social media.
4.2.3. Beauty & Cosmetics
More Koreans claim to have
bought beauty and personal care
products online in the past year
than any other country (62%).
35
Online sales of cosmetics reached
GBP 110mn in 2015, representing
approximately 11% of all products
purchased directly from overseas
that year.
36
Moreover, Koreans
are increasingly purchasing
at-home aesthetic devices such
as sonic facial cleansers, high-
tech massage rollers and laser
hair removal systems. Gmarket
claims that sales of beauty
devices increased 23% in 2015
compared to the previous year
and Auction saw sales of skincare
and massage devices rise 394%
in 2015 over the year before.
37
Natural Cosmetics
Organic, natural and paraben-free
beauty products have become
popular among health-conscious
Korean consumers. As many of
these products are still difficult
to find on the shelves, they
are mainly bought on foreign
websites such as Amazon and
eBay. Although online retail is
not yet the preferred channel for
mid-to-high-end cosmetic brands
in Korea, growing popularity of
websites such as
Strawberrynet.com suggest that
Korean consumers have begun to
look beyond department stores
to find better deals, as well as to
find foreign brands that are not
available in Korea.
CLOSER LOOK
Avalon Organics
(www.avalonorganics.
com) is a US-based natural
organic health and beauty
products manufacturer. It
is considered one of the
most popular foreign hair
care brands in Korea. As
conscious consumers have
come to focus more on the
quality of ingredients, many
organic cosmetics brands,
including Avalon Organics,
have rapidly gained in
popularity. Avalon Organics’
products were originally
available on a few foreign
websites, including iHerb,
but are now easily found on
major Korean online malls
as well as offline drugstores
and department stores.
Medicinal Beauty Products
European cosmetics that are now
easily found in local pharmacies
were introduced to the Korean
market in early 2000s, first by
Korean dermatologists and later
by various Korean buying agents
based in Europe. European
brands of cosmetics have been
popular in skin care with 21% of
shoppers claiming their favourite
brands are French labels. Their
mild ingredients and increasing
brand awareness have a strong
appeal to Korean consumers, and
have experienced remarkable
growth in the market. Bioderma,
for example, has enjoyed a
UK Trade & Investment 27
double-digit growth rate every
year since it entered the Korean
market. The company currently
uses both online and offline sales
channels in the Korean market.
Medicinal cosmetic makers must
make sure, however, that all of
the ingredients in their products
can be imported for personal use
without additional certificates
(see section 6). Korea Customs
Services and UKTI South Korea
can provide the latest information
on the matter.
Good examples of other
successful medicinal cosmetic
brands in this category include:
• Bioderma (www.bioderma.com)
• Uriage (www.uriage.com)
• La Roche-Posay
(www.laroche-posay.com)
The barriers between
the dierent channels of
distribution in the cosmetics
industry will soon break
down due to the Korean
consumers’ ability to nd the
best quality brands regardless
of the channels of distribution.
Channels of distribution will
become more diversied to
include existing channels, such
as pharmacies, online malls,
drug stores, TV home-shopping
channels, as well as new
online channels such as social
networks and personal blogs.
Representative – Bioderma Korea
Men’s Care
Korea’s male skincare market
doubled in value from 2009 to
2014. The average Korean male
uses 13 grooming products a
month and spends more on such
products than their counterparts
in any other country. Korea
accounts for 21% (GBP 390mn)
of global spending in this entire
industry.
38
The trend started
from basic skincare products,
such as face masks, but quickly
spread to makeup products, such
as tinted moisturisers. Recently
introduced foreign men’s care
brands have gained in popularity
largely due to creative online
buzz marketing in Korea.
CLOSER LOOK
Bulldog Skincare
(www.bulldogskincare.com)
is a manufacturer of men’s
skin care products based in
the UK. The brand entered
the Korean market in 2013
through a partnership with
Olive Young, one of the most
popular beauty drugstores
in Korea. The bulldog
products are currently
available on a number of
major e-Commerce websites
such as Gmarket, Auction
and Coupang. But with retail
prices above the global
average, many customers
still turn to cross-border
online shopping websites.
4.2.4. Baby Products & Toys
Baby products are heavily sought
after online. Nearly 10% of all
e-imports consisted of baby
products (about 6% from the F&B
and 4% from the baby products
and toys categories) in 2015 and
40% of all baby product sales
completed in Korea in 2015 were
made online, a figure that is
expected to grow even further.
e-Exporting to Korea – A Guide for British Companies28
Baby Food, Cosmetics
and Clothes
Online shopping is particularly
well developed in this category
in Korea with 79% of all nappies,
72% of all baby food and 58%
of all wet tissues bought online,
representing the largest online
shares of any product category.
39
The top e-imports in the baby
product category across multiple
cross-border e-commerce sites
in January 2016 included baby
formula, organic baby food
(jars, pouches), hypoallergenic
bath products, feeding bottles
and micro-fleece swaddles and
blankets. Imported powdered
milk, in particular, has been
gaining popularity among young
Korean mothers who are keen
to use foreign brands, such as
Aptamil and Holle, in the belief
that imported brands generally
have better and safer ingredients.
In 2014 sales of powered milk
purchased directly from German
e-commerce websites amounted
to GBP 20mn, making it one
of the major e-imports from
Germany.
40
CLOSER LOOK
Aptamil
Educational Toys
The toy market is led by Lego,
due to its educational value
that Korean parents hold in
high esteem, and local brands
featuring popular Korean cartoon
characters such as Tobot or
Pororo. Global toy manufacturers
such as Hasbro or Mattel have a
combined market share of less
than 5 percent as Korean children
grow up with different, local
characters. Therefore, British toy
makers could take advantage
of eexporting, especially if the
product boasts educational
appeal and is not linked to
characters that are unknown
in Korea. A good example of
a successful e-exporter in
this category is the US-based
Learning Resources
(www.learningresources.com).
(www.aptaclub.co.uk/products) is a popular baby powdered milk
product manufactured by Danone (Germany). Foreign-made
baby formula, including Aptamil, first became popular in China,
especially after a local product containing industrial chemicals
killed six infants in 2008. Direct overseas purchases of baby
powdered milk started to increase dramatically in Korea in
early 2013. Aptamil products are available through a number of
purchasing agents as well as on Ticket Monster.
Young mothers rule the
e-Commerce industry in Korea.
They are always on the go.
They do not have time to go
to a supermarket to buy baby
oil and diapers. They take
out their smartphones and
order diapers in bulk online.
While doing so, they also ll in
the shopping cart with other
things – food, snacks, clothes,
etc. Almost all of our category
buyers think of mothers in their
20-30s rst when building their
product selections.
Baby & Kids Category Buyer –
11th Street
Parents these days are all
about their children’s well-
being and education. They
want their children to have the
highest quality care there is.
They will order baby products
and preschool educational
items on foreign websites as
many parents are scared of
dangerous knock-os from
China.
CEO – Gymboree Music & Play
Korea (Gymworld)
UK Trade & Investment 29
4.2.5. Home & Living
Korean households are known
for their discrepancy between
high-tech home appliances,
such as LCD screen-equipped
refrigerators and ultra-flat
UHD television sets, and low-
quality furniture, tableware and
kitchenware. The market was
dominated by local and Chinese
manufacturers who dictated
design and pricing, but recently
global brands, such as IKEA, H&M
Home and Zara Home, have set
up successful brick-and-mortar
stores in the country.
The largest IKEA store in the
world opened in Korea in 2015
and has been a great success
to date. Costco recorded
record growth in tableware and
kitchenware sales in 2015, chiefly
amongst people in their 40s and
50s. H&M and Zara, on the other
hand, attract people in their 20s
and 30s with flagship stores
in trendy retail areas of Seoul.
More and more products in this
category appear on cross-border
e-commerce websites as well,
including Laura Ashley with its
special corner on 11th Street.
41
The aforementioned brands
also saw growth in sales of
bed spreads sheets, bathroom
linen (e.g. towels, etc.), and
bedroom and bathroom clothing
(robes, pajamas, slippers, etc.).
Consumers value attractive
modern design and affordable
pricing. While home and living
products are still not the most
popular in terms of cross-border
online shopping, many industry
insiders agree that they will
be the “next big thing” in the
e-commerce space.
Koreans still do not have much
to choose from in terms of home
décor and furniture. IKEA
is a blessing and is likely to
stimulate the market. Koreans
have been buying things from
IKEA in the US using shipping
agents for years now, and
they still are because IKEA in
Korea is expensive. We need
more options, more fashionable
brands to oer their products
to consumers in an aordable
way. We have this category
amongst our strategic growth
areas for 2016 and beyond..
Business Development Manager –
GS Retail
To date, few online stores offer
shipping options to Korea for
home and living items and in
most cases Korean customers
need to use buying or shipping
agents to make overseas
purchases. Interest in this area is
growing quickly, especially among
newlyweds in Korea. Popular
items range from kitchenware
and small home appliances to
furniture and beddings. A number
of high-end products, such as
kitchenware from Lenox (US) and
Portmeirion (UK), are available
in major department stores in
Korea but more and more people
are purchasing these types of
products through cross-border
e-commerce.
CLOSER LOOK
According to Malltail, one of
the most popular buying and
shipping agents in Korea,
direct orders of popular
products for newlyweds
(e.g. coffee machines,
microwaves, kitchenware,
etc.) increased 25% from
August to September 2015
due to the approaching
peak wedding season. As
European online retailers
usually try to get rid of their
old inventories towards the
end of every year, they put
clearance markdowns on
products starting from early
fall, which has attracted
more consumers in Korea,
especially young couples.
e-Exporting to Korea – A Guide for British Companies30
Currently overseas companies
that deliver their products to
Korea include:
• Bed, Bath & Beyond (US)
(www.bedbathandbeyond.com)
• Overstock (US)
(www.overstock.com)
Pet Products
Another interesting opportunity
for British e-exporters is
pet accessories. Koreans
have embraced the trend of
humanising their pets – grooming
and dressing them up, fitting
apartments with dedicated pet
amenities, etc. In fact, Korea’s pet
industry grew 80% to GBP 1.16bn
in 2015 from GBP 690mn in 2010.
This figure is expected to reach
GBP 3.5bn by 2020.
42
According
to Auction, sales of pet products
increased by 25% in 2015
compared to 2014. Pet furniture
sales saw a growth rate of 129%,
followed by pet shower and bath
supplies (60%), grooming kits
(33%) and perfume and hair dye
products (36%).
Sales of pet strollers, in particular,
have risen by 145% in 2015
compared to 2014.
43
Pet strollers
usually cost from GBP 58-116, but
in the case of the British high-
end brand, Norton Pet, they can
cost up to GBP 290. Norton’s pet
stroller products were considered
one of the most popular pet
care products in 2015 and
were featured on various open
markets, including 11th Street and
Auction.
CLOSER LOOK
Ruffwear
(www.ruffwear.com) is a
manufacturer of premium
canine outdoor gear based
in the United States. The
company entered the
Korean market in 2015
through a partnership
with Korean importer/
distributor of camping and
lifestyle products. Initially
introduced to consumers
through cross-border online
shopping, Ruffwear products
are currently available
through various channels,
including a flagship store
in Seoul, camping-related
retailers and Galleria’s online
shopping mall.
31 UK Trade & Investment
e-Exporting to Korea – A Guide for British Companies32
Market Entry Strategies
Key Points
• e-Exporters can adjust the level
of resource needed to sell their
products to Korean customers
• e-Exporters can work alone
or with local e-Commerce
companies
• Localised marketing and brand
awareness are crucial – teaming
up with local agencies or
Internet personalities can be a
great way to spread a brand’s
message
• The most successful strategy is
often multi-channel, exploiting
both online and offline
opportunities
5.1. Market Entry Methods
Traditionally, retail businesses
looking to expand into new
markets considered a few
standard routes which included
setting up a local entity in
the form of a wholly-owned
company or a joint venture with
an established local partner,
licensing their brands to locally
experienced master licensees or
franchisees, or working with a
local distributor. These methods
are still valid and indeed advisable
in many situations - relying solely
on e-exporting may not work for
everybody. However, e-exporting
is a good way for British brands
to understand more about the
Korean market and its consumers,
and build the foundation for a
future multi-channel presence.
e-Exporting represents a great
opportunity for those brands that
offer relatively niche products at
low volumes, as it allows higher
margins. It is also a flexible
approach for those who offer
a hot product that fits with a
current market trend.
5.1.1. Level 0: Using a Global
e-Commerce Platform
Placing your products on
Amazon, eBay, Rakuten or
Alibaba, with shipping to Korea
enabled, is arguably the most
basic way to reach Korean
consumers as an e-exporter.
Koreans are already familiar
with the websites and use them
frequently. However, brand
awareness, brand exposure and
brand visibility are likely to be
low and, without a coordinated
and localised marketing strategy,
sales to Korea are likely to be
sporadic.
UK Trade & Investment 33
Key Advantages:
• Cheap, low effort, easily
accessible
• Able to address multiple
markets under a trusted
marketplace brand name
Key Disadvantages:
• Not personal, not targeted at
specific consumers
• Not in Korean
• Difficult to find products without
brand awareness and/or defined
need
Things to Consider:
• Utilising the e-commerce
marketplace’s built-in tools
(usually paid) to promote
products upon keyword search
is crucial
• Understanding the
marketplace’s fee structure
is important as it can vary
across sites and categories. It is
recommended to have a good
sense of potential margins and
the marketplace’s business
model
CASE IN POINT
Sabrent
(www.sabrent.com) is a
manufacturer of computer
peripherals and accessories
based in the United States.
The company uses a number
of e-commerce marketplaces
to sell and promote its
products, including Amazon,
Overstock.com and BestBuy.
Its 4-Port USB is one of
the best selling products
in Amazon’s electronics
category. Sabrent uses
Amazon’s “Fulfilment by
Amazon,” a service that lets
sellers store their products
in Amazon’s fulfilment
centres. Amazon takes care
of packing, shipping and
customer service. Many
products bought by Koreans
on Amazon follow this path.
5.1.2. Level 1: Website with
Shipping Options to Korea
For small businesses that already
operate an online store as a
part of their website, adding an
international shipping option
at checkout is a good starting
point. Global couriers such as
DHL, UPS or FedEx offer special
e-commerce packages for small
and medium-sized businesses.
The delivery option offering
should be versatile allowing
customers to choose from
different price points relative to
the speed of delivery, etc.
Key Advantages:
• Cheap and available with a
currently existing shipping plan
• Can receive free or cheap
consulting from global couriers’
e-commerce teams
• Eliminates most middlemen
• Easy to track and analyse sales
and related patterns by territory
Key Disadvantages:
• Lacks localisation, local
personality and local appeal
• Product may not be noticed
unless the customer knows what
he or she is looking for
Things to Consider:
• Multiple options for shipping
speed should be offered.
International customers, just
like domestic customers, exhibit
distinct preferences across the
price-versus-speed spectrum
• Indicating delivery in estimated
business days instead of a
specific date is a good way to
avoid possible conflict with
customers
• Note that Koreans celebrate
different holidays to westerners
(e.g. Lunar New Year as opposed
to Solar New Year), and these
should be factored in when
planning delivery schedules
e-Exporting to Korea – A Guide for British Companies34
• The language and layout of the
website may be unfamiliar to
some Korean customers. While
Koreans, especially younger
ones, can generally read English,
Korean is preferred.
• Korean web design follows
different rules and trends.
Koreans are used to having a
huge amount of information and
product pictures when shopping
online
CASE IN POINT
Houseology
(www.houseology.com)
is a UK-based premier
online interior design
store, working on various
residential and hotel
projects across the world. It
offers international shipping
to over 80 countries,
including Korea. There is
no standard shipping price
as it depends on the size
and weight of the boxes but
the price is automatically
calculated at checkout when
the address is entered.
The company also accepts
extended returns (within 35
days of receipt) for a refund
but shipping costs and other
duties and taxes are not
refunded.
5.1.3. Level 2:
Website Localisation
Retailers that experience an
increase in enquires or sales
from Korea may want to take
advantage by building a fully
localised subsection of their
e-commerce website. This is
also a good option for those
who already have good brand
recognition in Korea and want
to skip the previous, lower-
engagement steps. Korean
consumers will appreciate a
shopping experience tailored
to them and trust-building,
so crucial online, is more
effective when conducted in
the customer’s native tongue.
Localising a website may the
most effective way to increase
the customer base and to turn
accidental shoppers into repeat
shoppers.
Key Advantages:
• Increased localisation, local
personality and local appeal
• Increased ease of use for
Korean customers and a better
shopping experience
• Increased likelihood of repeat
purchases
Key Disadvantages:
• Requires time and investment
• Requires professional
translation and regular updates
Things to Consider:
• Localised websites require
regular reviews as well as
updates when new products are
released. It therefore requires
sustained investment, rather
than a one-time effort
• Displaying costs and prices
in the customer’s currency is
important to turn visitors into
customers as it builds trust in
the seller and increases the
likelihood of conversion to sales
• Levels of localisation vary
from simply translating a few
existing pages to tearing down
the website and building a new
shopping experience that fully
reflects the local e-commerce
culture. Translation should
be done by a professional as
poor translation could create a
negative impression
CASE IN POINT
ASOS
(www.asos.com) is a British
online fashion and beauty
retailer that sells over
850 brands as well as its
own range of clothing and
accessories. ASOS ships to
more than 237 countries,
including Korea, from its
central distribution centre
in the UK. Although not
fully localised to support
the Korean market, ASOS
offers a few pages translated
into Korean, where it shows
how to navigate the website
along with its company
introduction
-
UK Trade & Investment 35
5.1.4. Level 3: Dedicated
Customer Support
Korean customers are used to a
very high standard of customer
support and good customer
support can be crucial in
e-commerce as a trust-building
tool. Websites that, on top of
having a localised Korean version,
have dedicated support in Korean
(email, phone, chatroom, etc.),
excel at retaining their customer
base and are more likely to enjoy
the effects of free word-of-mouth
marketing.
Key Advantages:
• High localisation, local
personality and local appeal
• Improves the customer
experience and customer
retention
• Direct dialogue with customers
allows for more targeted
improvement over time
Key Disadvantages:
• Can be costly – requires
dedicated staff with native-level
Korean
Things to Consider:
• Dedicated support should be
of a high quality which means
conducted by native or fluent
Korean language speakers who
are familiar with the Korean
market, always very polite and
focused on resolving issues with
little fuss
• Ideally, support should be
available 24/7, but failing that
lines should be operational from
9am to 6pm, in the Korean time
zone (UTC+09:00 in winter,
UTC+08:00 in summer)
• Dialogue with customers
may help design better
marketing tools such as events,
promotions, discount codes etc.,
which can help drive more sales
• International returns policy
should be clearly visible. Korean
customers expect to be able to
return or exchange unwanted or
faulty products hassle-free
CASE IN POINT
Strawberry Net
(www.strawberrynet.com)
based in Hong Kong, is one
of the largest online beauty
retailers, stocking over
30,000 products. With its
fully localised website, the
company provides a free
shipping service to over 200
countries worldwide. The
company offers country
specific promotions and
services. It has partnered
with major Korean credit
and debit card companies,
allowing Korean consumers
multiple payment options
without charging additional
fees. Strawberry Net also
offers first-time shoppers
refunds on all duty fees
and taxes they may have
incurred upon entry to
Korea.
CASE IN POINT
YOOX
(www.yoox.com) is an
Italian online retailer of a
wide variety of products,
ranging from clothing
and accessories to living
and dining products. The
company ships to over
100 countries worldwide
but offers only one
shipping option for Korean
customers, which is the
express service with a flat
fee of GBP 18. Its website
is designed to fully support
Korean customers while
providing local customer
service lines.
e-Exporting to Korea – A Guide for British Companies36
5.1.5. Level H: The Hybrid
Companies like Gmarket, 11th
Street and Auction have an
option for foreign retailers
based outside of Korea to
open seller accounts without a
Korean corporate registration
number. The procedure requires
submitting certain documents
and the Open Market Review
Teams reserve the right to reject
candidates. While it is possible
to organise this in English, the
online storefront’s interface,
product descriptions, terms
and conditions and customer
service should be in Korean.
The open market staff offers
minimal support but the ongoing
operation, page and product
updates, dealing with customers,
etc. is handled by the seller.
The key challenge is that since
e-exporters are operating
within a Korean website for
Korean customers,they must
be able to function in Korean.
Customers will ask questions
before purchasing that may be
crucial in their decision-making,
and will maintain a dialogue
post-purchase by leaving reviews
and comments. There will also
be instances of complaints and
refund/exchange requests.
Without local language support
the model is unsustainable.
Another challenge of this model
is payment. For instance, on
Gmarket customers pay via a
domestic online payment system
or bank transfer to Gmarket’s
“virtual account”, which Gmarket
then transfers to the seller. Credit
card payments are not currently
available. There are two ways
CLOSER LOOK
foreign retailers can deal with
this issue. A retailer can either
sign an exclusive deal with the
e-commerce company itself
resulting in it becoming the de
facto agent or sign a local agent
that manages import procedures,
product certification, open
market storefront, etc.
Key Advantages:
• Selling under a well-established
e-commerce brand with high
penetration rates
• Access to e-commerce
company’s marketing, local
customer support and
distribution network
• Support in handling of
formalities (e.g. import
procedures, Korean labelling,
delivery, etc.)
To become a Global Seller on Gmarket and Auction a non-Korean
merchant should submit:
• Business registration certificate
• Bank statement
• Photocopy of identification document (passport preferred)
• Seller registration form
• Seller confirmation letter
Documents will be reviewed within 3-7 days. If the decision is
positive, one can start uploading products on the website. The
platform will help handle payments via bank transfer to the seller.
The platform will take commission which is negotiated with each
vendor separately.
UK Trade & Investment 37
Key Disadvantages:
• Requires initial investment in
business development activities
(e.g. meetings with agent/
partner, product testing, market
research, etc.)
• Splitting of the sales margin
with the local agent/partner (for
e-commerce, typically 10-20% of
sales)
• Suitable for relatively well-
known brands with high sales
volume potential
CASE IN POINT
Macy’s and 11th Street
(http://shop.11st.co.kr/
koreasjworld). NYC’s famous
Macy’s Department Store
has a small corner on 11th
Street’s Global Shopping
subsection though which
shoppers can order items
to be shipped to them
from the US. The online
storefront is operated by SJ
Company, a Korean agent.
SJ Company is responsible
for relaying product orders
to Macy’s from 11th Street
and handles payments and
local customer support.
Macy’s ships the product
to the buyer directly upon
receiving funds from SJ
Company which takes a
commission fee.
5.1.6. Level 4: Multi-channel
A multi-channel approach that
utilises both offline and online
shopping channels can still be
the most effective strategy for
those looking for sustained
growth in the Korean market.
With new technologies such
as m-commerce and mobile
payments, augmented reality, QR
codes, Internet of Things, etc.,
savvy retailers are finding new
ways to make online and offline
work together.
This strategy requires a local
presence in the form of a
carefully selected and dedicated
partner with market expertise
and technical knowledge.
The partner would typically
handle product importation,
certification and labelling, as well
as marketing, B2B sales to offline
retail channels (hypermarkets,
department stores, pharmacies,
etc.) and partnerships with local
e-commerce platforms (Gmarket,
11th Street, Coupang, etc.). The
brand can in turn focus on parallel
e-exports to Korea via its global
website or global e-marketplaces.
Key Advantages:
• Often the most comprehensive
and universal method, suitable
for most retailers and brands
• Full localisation including
customer support
• Full market coverage
• Field for creative sales
techniques and marketing
(showrooming, webrooming,
etc.)
• Local market expertise and
support from the partner
Key Disadvantages:
• Can be costly and time
consuming
• Requires careful planning and
careful selection of the right
partner
Things to Consider:
• An experienced partner that can
commit to developing a brand’s
presence in the local market is
key. UK brands may be tempted
to work with large retail groups,
but smaller distributors can be a
better fit
• Large retail groups are fierce
competitors, siding with one
often eliminates the possibility
of working with another, limiting
market reach. Small distributors
can often work with multiple
groups
• UK brands should make sure
that the agreement with the
local partner is not restrictive
in the sense that it does not
stipulate that the brand cannot
e-export to Korea using its own
channels
e-Exporting to Korea – A Guide for British Companies38
• Brands need to think of creative
ways to make online and offline
work together. Some examples
include offering digital coupons
that can be redeemed in a
brick-and-mortar store, and free
delivery/discount code vouchers
offered upon physical purchase
to input during the customer’s
next online purchase.
CASE IN POINT
Cath Kidston
(www.cathkidstonkorea.
co.kr): Cath Kidston entered
the Korean market through
a partnership with a Korean
importer/agent, Starluxe
(www.starluxe.co.kr), in 2011.
The products are currently
found in 22 stores and online
shopping malls in Korea, all
of which are managed by
the Korean distributor. The
online shopping mall offers
free shipping for orders over
GBP 29.
5.2. Marketing
All of the aforementioned
e-export strategies will benefit
greatly from a dedicated
marketing mix for the Korean
market, the elements of which
should be familiar to all retailers.
Their effectiveness and cost
will vary. It should be noted that
Korean consumers value stories
behind brands they choose. The
brand’s origin, its mythos, its
founder/CEO – all these factors
can positively influence brand
perceptions and story-driven
marketing messaging is very
effective, through whichever
medium it is delivered. Here
are some of the most common
marketing strategies used by
e-exporters that sell to Korea.
5.2.1. Level 1: Adding Korea to
Current Digital Media Plan
In order to increase Korean
consumers’ exposure to a new
brand, exporters should consider
expanding their current digital
marketing plans to include Korea
as a target territory. Marketers
must remember that search
engine optimisation should be
optimised for the Korean search
engines, Naver and Daum, which
are very strong in the market.
To make the creative media
content (e.g. website banners,
mobile website ads, etc.) more
relevant and relatable, it is
advised that it be in Korean.
According to local marketing
specialists, the most relevant
advertising channels for Korean
Internet shoppers include
desktop web ads, YouTube ads
(although Google search is not
popular, video consumption on
YouTube is strong), mobile web
ads, mobile app ads and Facebook
ads. Marketers should also make
sure that their ads appear on
local-language websites that are
relevant and benign to the brand
(contextual targeting).
CASE IN POINT
Optimum Nutrition
(www.optiumumnutrition.
com) is an American health
and dietary supplement
brand for athletes and
fitness aficionados. It uses
Korea-focused contextual
targeting on YouTube and
certain Korean fitness
websites to increase brand
awareness while promoting
sales through their online
sales partners, iHerb and
BodyBuilding.com. The
company became the
most recognised health
nutrition brand in Korea and
subsequently began to work
offline with Costco Korea.
UK Trade & Investment 39
Figure 6: Search Engine Market in Korea
90
80
70
60
50
40
30
20
10
0
%
Percent
Source: Digital Insight Today (2015)
Naver Daum Google Zum Bing
5.2.2. Level 2: Social Media
and Local Internet Personality
Sponsorships
Retailers can use Korean social
media (e.g. set up localised
Facebook fan page or KakaoStory
page) to build brand awareness
and influence word-of-mouth.
This in turn should result in more
search queries for the product in
question. The localised fan pages
should be active in order to be
effective. Live dialogue is crucial
and so this approach requires
staff with excellent Korean
language ability, at least part-
time.
Another way to use social
media without hiring Korean-
speaking staff is to get in
touch with local bloggers and
Internet personalities to offer
CASE IN POINT
Daniel Wellington
(www.danielwellington.com)
is a Swedish/British brand
of watches and accessories.
In 2015 the company ran
a successful social media
campaign whereby it
encouraged Instagram users
to posts pictures sporting
its watches with branded
hashtags. Some celebrity
Instagrammers were given
watches for free so that
they could snap a picture
and post it to their followers.
The campaign spread to
Korea and was featured
on popular accounts with
pictures of everything from
cats to fashion models and
designers.
sponsorships (e.g. free samples,
merchandise, etc.) in exchange
for mentions and “shout-outs” on
their own social media channels.
This is a very effective and
relatively inexpensive tactic.
5.2.3. Level 3: Using Local
Digital Media Agency
For those that want to develop a
marketing strategy fully tailored
for the Korean market, it might be
best to work with a local agency.
A local specialist team should
allow a brand to better exploit
local digital/social media, local
search engines and traditional
marketing campaigns. This is
the most appropriate strategy
for retailers fully committed to
the market or those willing to
invest more heavily in exploiting
the market. Local agencies know
Korean consumers well and
so are well placed to execute
the most effective campaigns
to position a brand in the local
market.
Some creative agencies in
Korea specialise in working with
retailers from Europe. These
include:
• Asiance (www.asiance.com):
Works with fashion brands
such as Calvin Klein, Gucci,
cosmetic brands including Nivea
and L’Oréal, F&B brands such
as Danone, and e-commerce
companies such as Rakuten
• Innored (www.innored.co.kr):
Works with Ticket Monster,
Northface, Reebok, M&Ms, etc.
• Dmajor (www.dmajor.kr): Works
with Guinness, Smithwick’s,
Estée Lauder, Burger King, etc.
e-Exporting to Korea – A Guide for British Companies40
Logistics and Customs
Key Points
• All global couriers offer shipping
options to Korea, some also
provide consulting services
• Products valued below GBP 104
can be shipped to Korea duty
free, and are customs-cleared
within a couple of days based on
Manifest Clearance
• Products valued between GBP
104 and GBP 1,380 go through
a Simplified Clearance that
includes extra tax paid by
customer and takes 2-9 days
• Products valued between GBP
1,380 and GBP 4,695 go through
Standard Clearance, which can
take upwards of 7 days and is
handled by professional customs
agents
6.1. Logistics
Global shipping companies
that offer special services for
e-exporters include Royal Mail,
DHL and FedEx. e-Exporters
can contact their respective
e-commerce teams and learn
more about the services offered.
Such services include consulting
and handling, but also website
design elements such as a
delivery fee calculator to be
integrated on the checkout
page. e-Exporters usually work
with a global shipping company.
In certain cases (e.g. Standard
Clearance), one may need to
use customs agents as well,
but those are often hired or
recommended by global shipping
companies. Most global couriers
have preferred local delivery
companies that they work with
and will internally deal with the
handover to the local partner.
The top local couriers are Korea
Post, CJ Express, Hanjin, Hyundai
Logistics Company and Logen.
The couriers will also be able to
provide detailed information
regarding potential restrictions
such as forbidden substances.
CASE IN POINT
BodyBuilding.com
uses DHL e-Commerce
platform for its deliveries
to Korea out of warehouses
in the US and the UK. DHL
offers a live delivery fee
calculator at the checkout
page that blends with the
website’s overall design.
BodyBuilding.com offers
two delivery options via
DHL: Economy, with a USD
50 basic fee, a 4-9 business
day delivery time including
local delivery by DHL Korea
and full tracking, and Super
Saver, with a USD 15 basic
fee, an 8-20 day delivery
time with local courier
delivery and limited tracking.
UK Trade & Investment 41
6.2. Customs
DISCLAIMER
The Korean government is
continuously working on
making the e-commerce
regulatory environment
easier for both vendors and
customers. It is therefore
likely that the regulations
presented in this report will
improve further over time.
British retailers considering
e-Exporting to Korea should
contact the Korean Customs
Service for the latest updates or
ask the UKTI team in Korea.
Under the Korea-EU FTA, if the
shipment value is below GBP
104, the consumer pays no
customs duties or value added
tax and the products should
pass through customs within a
couple of business days. Products
valued up to GBP 4,695 can
be imported from the UK by
Koreans for personal use with
reduced paperwork. At the same
time, e-exporters can also skip
a lot of formalities required of
traditional exporters, such as
product registration, safety
testing, labelling, etc., as long as
the customer is importing the
product for his or her own use.
Shipments valued at above GBP
4,695 require the exporter to
have an Approved Exporter
status in order to benefit from
tariff-free trade. Only 74% of
British exporters eligible for
the Approved Exporter status
have applied since the FTA was
signed in 2011, while others
still pay tariffs that are easily
avoidable. British exporters
should contact the UKTI or HMRC
to get professional support in the
process of becoming an Approved
Exporter. Note that some product
categories are still subject to
tariffs.
CASE IN POINT
In order to benefit from tariff
reductions under the Korea-
EU FTA, goods need to be
accompanied by a self-issued
Certificate of Origin (C/O).
For goods with a value of less
than EUR 6,000 (GBP 4,695),
exporters can self-issue the
C/O. The C/O should be written
on the invoice, delivery note
and/or other commercial
documents and state:
“The exporter of the products
covered by this document
(Customs Authorization No.)
declares that, except when
otherwise clearly indicated,
these products are of
preferential origin.”
For goods exceeding EUR
6,000 (GBP 4,695), only
companies with Approved
Exporter status are eligible to
self-issue the C/O. Interested
companies should contact the
UKTI or HMRC for more details
on becoming an Approved
Exporter.
e-Exporting to Korea – A Guide for British Companies42
The Korea Customs Service sets
the quantity criteria under which
they recognise the imported
items as for individuals’ use and
not for commercial purposes. For
instance:
• 6 bottles of vitamin
supplements are the maximum
import allowance at one time by
one individual
• For alcohols, one bottle of less
than 1L is the duty free limit but
the item is still subject to the
liquor tax and education tax
regardless of price. Once the
price goes over GBP 104 or the
volume exceeds 1L, customs
duties and value added tax will
be applied
• For perfumes: 1 bottle of less
than 60ml and below the value
of GBP 104
If the products are ordered by
and purchased for individuals,
there are three types of
clearance for e-commerce B2C
transactions: Manifest Clearance,
Rapid Entry/Simplified Clearance
and Standard Clearance.
“items available for the manifest
clearance” can be processed
within one business day. For
this, KCS only requires that
the package has an invoice or
manifest attached containing a
list of contents, the weight and
value, and contact details of
the sender and the consignee.
Certain products are technically
not eligible for this process but,
in reality, as long as the product
is valued below GBP 104, and the
exporter makes sure that there is
proper information attached on
the invoice, there should be no
issues.
1-2 business days
CASE IN POINT
Items not available for
manifest clearance
Items that are excluded from
importation through the
manifest clearance:
• Medical products,
herbal medicines, most
agricultural products,
health supplements,
processed foods,
functional cosmetics
especially those with
skin care effect (e.g.
anti-acne, anti-aging,
etc.),
placenta-based beauty
products, steroids
In some of these cases, the
definitions customs officials
apply can be ambiguous.
To prevent being subject to
unwrapping and inspection
of the package, some
exporters list a product’s
full names on the invoice.
For instance, in the case of
health supplements, instead
of listing them as “health
supplements”, exporters put
full names (e.g. “Optimum
Nutrition PRE” – pre-
workout formula).
Figure 7: Manifest Clearance
Arrival
X-Ray inspection
Open box inspection
(if needed)
Invoice check
Release
1. Manifest Clearance
Products valued below GBP
104 (GBP 138 for packages
from the US) and listed by the
Korea Customs Service (KCS) as
UK Trade & Investment 43
2. Rapid Entry / Simplified
Clearance
Most packages with a value
between GBP 104 and GBP
1,380 can be processed based
on a simplified duty rate. The
customer will have to pay an
additional tax before he or she
can receive the order. The KCS
will calculate the tax to be paid,
contact the customer to inform
them and release the product
only after receipt of the funds.
Rapid Entry / Simplified Customs
Clearance usually takes two to
nine business days.
Figure 8: Rapid Entry / Simplified Clearance
Arrival
X-Ray inspection
CASE IN POINT
Additional import tax for
individual use
The simplified tax rate is
equal to product value times
average tax. The average
tax is about 20% but some
items can be charged at
different percentages. For
instance, general clothes
and shoes are subject to
25% tax, fashion items
made of leather are subject
to 30% and the average
tax on perfumes is 35%
plus additional inland taxes.
e-Exporters should state
clearly that customers may
be subject to such additional
taxes as certain items
including perfumes can be
subject to additional inland
taxes such as special excise
tax.
3. Standard Clearance
If a product is valued at over
GBP 1,380 or not applicable for
the Manifest Clearance or the
Rapid Entry, it will be subject to
a standard clearance with full
documentation and details to
be reported to customs. In this
case, a professional customs
agent would be involved in the
procedure that can take weeks or
months if not handled carefully.
Global couriers such as DHL or
FedEx have in-house customs
agents or can providereferrals
and so e-exporters who plan
to sell such products should
seek consultation from a global
courier.
Figure 9: Standard Clearance
Arrival
2-9 business days
Open box inspection
X-Ray inspection
Open box inspection
Formal Import
Declaration:
- Import Declaration
- Value Declaration
- Invoice Check
- Other Documents
Tax collection
from buyer
Release
Simplified Clearance
Application (fax/online)
7+ business days
Tax collection
from buyer
Release
44 A UKTI South Korea Report May 2016
1
MOTIE, Trading Economics
2
OECD Employment Outlook 2015
3
Population Reference Bureau 2015
4
eMarketer
5
eMarketer
6
eMarketer
7
Nielsen KoreanClick
8
Techcrunch
9
CNET
10
The Economist
11
Ministry of Trade, Industry and
Energy
12
Park, Lee & Kim (2014)
13
Kim, Yang & Kim (2013)
14
Joongang Daily
15
Nielsen Global Connected
Commerce Report 2016
16
KOSIS
17
Akamia SOTI Report, Q3 2015
18
eMarketer
19
Criteo, cEommerce Industry
Outlook 2016
20
Wall Street Journal
21
Nielsen Global Connected
Commerce Report 2016
22
World Consumer, CrediCards.com
23
ChinaSearch International
24
News BTC
25
Statista
26
Export.gov
27
Korea Customs Service
28
Hyundai Research Institute,
December 2015
29
Korea Customs Service
30
MK News, Maeil Kyeongjae
31
MBN News
32
Macromill Embrain
33
Nielsen Global Connected
Commerce Report 2016
34
FashionOne
35
Nielsen Global Connected
Commerce Report 2016
36
Korea Customs Service
37
Korea Herald, Feb 11 2016
38
Euromonitor (via The Economist)
39
Kantar Worldpanel, Accelerating
the Growth of e-Commerce in
FMCG 2015
40
Korea Customs Service
41
11th Street
42
Korea Herald, June 12 2015
43
Joongang Daily
For further Information
on this report, the Korean
market and to join UK Trade
& Investment South Korea’s
e-Exporting programme
contact:
UKTI South Korea
Trade.Korea@fco.gov.uk
For further Information on
the findings of this report
or how Intralink can assist
UK companies in South
Korea and globally contact:
Michal Waszkiewicz
Project Manager, Intralink Korea
michal.waszkiewicz@intralinkgroup.com
’
’
gov.uk/ukti
UKTI
UK Trade & Investment is the Government Department that
helps UK-based companies succeed in the global economy.
We also help overseas companies bring their high-quality
investment to the UK s dynamic economy, acknowledged as
Europe s best place from which to succeed in global business.
Disclaimer
Whereas every effort has been made to ensure that the
information in this document is accurate, neither UK Trade
& Investment nor its parent departments (the Department
for Business, Innovation and Skills, and the Foreign and
Commonwealth Office) accept liability for any errors,
omissions or misleading statements, and no warranty is given
or responsibility accepted as to the standing of any individual,
firm, company or other organisation mentioned.
© Crown copyright 2016
You may re-use this information free of charge in any format
or medium, strictly in accordance with the terms of the Open
Government Licence.
Published May 2016
by UK Trade & Investment
URN 16/0331 APKOR
