By Kim Tong-hyung
Staff Reporter
South Korean consumers are cutting back on their grocery and department store bills amid the tough times, but their e-commerce expenses remain intact.
According to Statistics Korea, previously the National Statistical Office, the country's online shopping malls grew 22.6 percent as a market year-on-year in August, following growths of 15.5 percent in July, 23.8 percent in June, 16.8 percent in May and 17.7 percent in April.
The growth is higher than what was expected at the start of the year, and officials at Statistics Korea believe that the country's market for online shopping malls may be worth more than the predicted 20 trillion won (about $16.8 billion) by the end of the year.
In comparison, the revenue at mega-discount stores fell 6 percent in September, showing that more customers are trying to get bargains in front of their computers rather than by driving to the closest E-Mart.
The advantage online shopping malls have in terms of money, time and convenience will become more pronounced amid growing fear over the swine flu outbreak, with many consumers perhaps choosing to avoid the large crowds at weekend discount stores.
``Online malls have previously relied on exploiting the gaps in offline retail networks, but have now grown to a point where they may be replacing the sales that previously went to discount stores and department stores. The average consumer is becoming more accustomed to buying products online and increasingly trusting the products and services provided by online shopping malls,'' said an official from Gmarket (www.gmarket.com), an online shopping and auction destination.
``The products handled by online shopping malls are becoming more diversified as well, with even furniture and food growing as popular items, due to the improved techniques in packaging and delivery.''
It seems evident that online shopping malls have grown into a major retail platform. An increase in online shopping revenue was what allowed Web portal Daum (www.daum.net) to shed its two previous mediocre quarters and report record operating profit of 13.4 billion won for the third quarter.
Major online shopping malls such as Auction (www.auction.co.kr), Gmarket and Interpark (www.interpark.com) are now trying to leverage their increased traffic by redesigning their Web pages to resemble media sites such as Naver (www.naver.com) and Daum.
Retooling their Web sites to be destinations for information could allow the online shopping malls to reduce their reliance on search engines and benefit from user-generated content, including product reviews and articles from user communities.
thkim@koreatimes.co.kr
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