Korea’s ecommerce market is still dominated by local players

Perhaps best known for K-pop, kimchi, cars, and consumer electronics, South Korea’s modest population of approximately 50 million people is also fostering the rapid growth of an outsized ecommerce industry – and it’s dominated by local players.

Photo credit: Pexels

Amazon is notable by its absence, and even the powerful family-run conglomerates that dominate most sectors of the local economy aren’t running the show.

Instead, locally bred unicorns and a host of startups are battling it out for a slice of the US$78 billion forecast to be spent online in 2020. In fact, half of Korea’s 10 unicorns are in online retail in some form.

King of the mountain

Korea’s chaebol (family-run conglomerates like Samsung and LG) have lorded over the offline retail food chain since the 1960s. Mom and pop shops scraped the dregs of the market, but few mid-tier businesses had any significant impact.

However, everything changed in 2010.

The year marked the founding of four companies that would all go on to become unicorns battling for supremacy in a market they created and continue to dominate today. Those companies are Ticket Monster (TMON), Wemakeprice, Woowa Brothers, and Coupang.

The following four years saw over US$428 million worth of investment being pumped into Korean ecommerce. The market exploded, running on a tech infrastructure that Korea’s telcos had previously set in place.

Coupang and Wemakeprice were originally daily deals businesses similar to Groupon, but both companies’ business models quickly evolved to involve third-party sellers like eBay.

Coupang went on to achieve unicorn status in 2014 and then famously pulled out of a planned initial public offering at the 11th hour. It then reinvented itself a second time as an “open market,” not unlike Amazon’s. In fact, this move earned Coupang the appellation “Amazon of Korea.” The real Amazon, though, is yet to make a dent on the country’s ecommerce market.

With a US$9 billion valuation, Coupang is now the no. 1 online shopping site in Korea.

Wemakeprice, on the other hand, achieved unicorn status in 2019, while TMON would have also shared the moniker if it hadn’t been acquired in 2011.

Fresh markets

Another Korean unicorn that lost its horn through acquisition is Woowa Brothers, the developer of food delivery app Baedal Minjeok (Baemin). The company became a unicorn in 2018 and was acquired in December 2019 by German food delivery company Delivery Hero for US$4 billion.

Baemin is Korea’s top food delivery service and is competing with Coupang and others in the last-mile space, offering one-hour delivery on a wide range of convenience items.

Changing preferences