Online retailers outsell high-street merchantsMadeinkoreablog
Annual sales through online outlets topped those from the high street for the first time last year, according to Statistics Korea, Sunday.
The volume of online transactions was the highest last year among “distribution channels” including department stores and discount store chains.
“Online stores are growing in leaps and bounds as they offer goods at competitive prices,” said a spokesman for online retailer 11st.
Online transaction volume last year reached 46.9 trillion won ($40.29 billion), including spending on direct buying, whereas transactions at discount store chains was 46.6 trillion won ($40.26 billion).
According to 11st, its transaction volume hit the 5 trillion-mark ($4.6 billion) in 2013 for the first time after it was launched six years ago. Out of it, mobile purchases reached 14.8 trillion won ($10 billion), representing a 125.8-percent increase.
The country’s department stores saw total sales decline by 1.9 percent last year from 2013. Sales generated this month at Lotte, Shinsegae and Hyundai department stores dropped slightly from a year earlier. Large discount retailers, E-mart, Homeplus and Lotte Mart also saw sales decrease by 4.8, 2.4 and 7.3 percent, respectively, during the same period.
“Today’s consumers lead busy lives and shopping takes time,” said an industry expert. “Consumers find researching and shopping on the web far more convenient than brick-and-mortar visits. They have access to more information online than when talking to an in-store sales associate.”
Retailers have enjoyed agreements with manufacturers that allow them to charge a premium for foreign and domestic products with little concern about competition.
As a result, consumers have begun to feel uncomfortable with unreasonably-high price tags, so a growing number of customers have turned to direct buying from abroad, challenging the existing retailers who charge much higher prices, by up to as much as nine times.
According to the Korean Customs Service, the overall value of direct buying soared to $642 million for the whole year of 2012 from $242 million reported in 2010.
In a recent survey conducted by the Korean Chamber of Commerce and Industry (KCCI) of 1,650 online shoppers, one fourth of respondents said they had the experience of making direct orders online mainly due to the lower prices available.
Some consumers even order televisions manufactured by Samsung Electronics from online shopping malls such as Amazon.com, because they are still cheaper even when tariffs and delivery costs are taken into account.
The delivery of televisions has been temporarily suspended due to overheated demand from Korean consumers.