e-Exporting to Korea – A Guide for British Companies UK Trade & Investment in partnership with 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. UK Trade & Investment 1 UK Trade & Investment UK Trade & Investment (UKTI) Contact us works with UK based businesses [email protected] to ensure their success in [email protected] international markets through exports. We encourage and Follow us support overseas companies Facebook: UK in ROK to look at the UK as the best Twitter: @UKTI_Korea place to set up or expand their @UKinKorea business. @UKTI To find out more about how we can help you in the UK and overseas, please visit our website at: www.ukti.gov.uk About Intralink Intralink develops and executes coordination and local 25 years of market experience. sales, licensing and investment representation. We work with strategies for European and our clients to commercialise Founded in 1990, Intralink American companies targeting technology, bring products to is headquartered in Oxford, new markets in East Asia. market, secure Foreign Direct England, and has offices in Through our proven Surrogate Investment, and source capital London, Berlin, Silicon Valley, Sales Program™, we provide from strategic investors. Boston, Shanghai, Tokyo, Seoul companies with a low risk, and Taipei. cost effective and practical Our clients are start-ups, small means to target these markets, and medium-sized enterprises, Contact us generate new or incremental government organisations and jonathan.cleave@ revenues, and establish an multinational companies in the intralinkgroup.com in-country presence through a automotive, energy, healthcare, Follow us local subsidiary, partnership or retail, technology and other Twitter: @Intralink_Asia acquisition. high-growth sectors. Through our team of over 60 full-time @Intralink_Korea In addition, we offer a range bilingual employees based in of pre- and post-market entry Asia, Europe and North America, services, including opportunity we offer a transparent and assessments, distributor and hands-on approach, extensive in­ supplier searches, investment country contacts, and over 2 e-Exporting to Korea – A Guide for British Companies Contents 1. e-Exporting Opportunities for 4 4. Cross-border Online Shopping 20 British Brands 4.1. Market Overview 20 2. Korea Overview 6 4.2. Key e-Export Categories 23 3. e-Commerce in Korea 8 4.2.1. Food & Beverages 23 3.1. Market Overview 8 4.2.2. Fashion 24 3.2. Key Characteristics 10 4.2.3. Beauty & Cosmetics 26 3.2.1. Policy 10 4.2.4. Baby Products & Toys 27 3.2.2. The Consumer 11 4.2.5. Home & Living 29 3.2.3. m-Commerce 11 5. Market Entry Strategies 32 3.2.4. Payments 11 5.1. Market Entry Methods 32 3.2.5. Delivery 12 5.1.1. Level 0: Using a Global 32 3.2.6. Customer Service 12 e-Commerce Platform 3.3. Open Markets 13 5.1.2. Level 1: Website with Shipping 33 Options to Korea 3.3.1. Gmarket (eBay) 15 5.1.3. Level 2: Website Localisation 34 3.3.2. Auction (eBay) 15 5.1.4. Level 3: Dedicated 35 3.3.3. 11th Street (11ST) 16 Customer Support 3.3.4. Coupang 16 5.1.5. Level H: The Hybrid 36 3.3.5. WeMakePrice 17 5.1.6. Level 4: Multi-channel 37 3.3.6. Ticket Monster 17 5.2. Marketing 38 3.3.7. Naver Corp 17 5.2.1. Level 1: Adding Korea to 38 3.4. Online Shopping Malls 18 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 UK Trade & Investment 3 Table of figures 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 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 offers 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 surpass GBP 32bn by 2018. The country’s population subscribed to reputation among Koreans country’s e-commerce industry LTE services, each browsing on an and are known for their design, is very competitive, with open average of 2.3 mobile devices. One quality and heritage. Whereas market platforms (Gmarket, third of smartphone users make a US e-commerce platforms have 11th Street), social commerce purchase with their phone at least dominated the overseas direct platforms (Coupang, Ticket once a week and retail mobile purchasing market in Korea until Monster) and online shopping conversion rates are twice as high now, market watchers believe that malls (SSG, Lotte Mall) all vying for as the UK. Some e-commerce direct purchases from the UK, market share. It is also a market websites in Korea record as much along with China and Germany, dominated by domestic brands – as 70-75% of their transactions on will see substantial growth over the global giants of e-commerce mobile. the coming years. such as Amazon or eBay have either failed to penetrate the Cross-border The Korean market and to secure a foothold. e-Commerce in Korea e-Commerce Market Korean cross-border e-commerce Korea’s advanced Internet Korea boasts the world’s seventh has grown considerably over the infrastructure plays a key role largest e-commerce market and past decade and surpassed GBP in facilitating the growth of trails only behind China and 1bn in 2015. Local consumers e-commerce. Korea is the only Japan in the APAC region. The are increasingly turning to country in the world that boasts e-commerce market was worth foreign websites to secure better average download speeds of GBP 25bn in 2015 (9% of total prices and purchase products over 20Mbps. m-Commerce is retail sales) and, with 13% year­ that are not available, or too particularly well developed in on-year growth, is expected to expensive, domestically. The Korea with over 80% of the UK Trade & Investment 5 current government is supporting • Beauty & Cosmetics (small-batch On the other hand, e-commerce crossborder shopping as a way to cosmetics, organic cosmetics, is increasingly understood to play lower Koreans’ cost of living and male grooming, perfumes, etc.) a complimentary role to offline to tackle the common practice of sales rather than replacing brick­ domestic importers, distributors • Baby products & Toys (organic/ and-mortar sales channels. Korean and retailers inflating prices. US hypoallergenic baby cosmetics, consumers, as elsewhere, engage e-commerce sites account for 74% clothes, educational toys, etc.) in webrooming (researching a of all cross-border e-commerce product online and the making sales in Korea, while Chinese • Food & Beverage (health the purchase in-store) and sites make up 11%. Within the supplements, organic food, showrooming (visiting a store to EU, Germany is the number one confectionery, etc.) research and select a product player with 5.4%. Although the before buying it, usually for a UK accounts for an impressive • Home & Living (home décor, cheaper price, online). Therefore, 11% of total global Internet kitchen/tableware, bed/ finding a distributor that can retail sales, only 1.4% of cross­ bathroom accessories, pet develop the right offline channels border e-commerce transactions accessories, etc.) for a company’s products remains conducted in Korea involve the important for increasing both UK.