Sales of online shopping malls beat superstores in 2015

By Choi Sung-jin

The sales of online shopping malls exceeded the sales of the so-called hyper or superstores for the first time last year.

According to Statistics Korea, online malls recorded sales of 43.6 trillion won ($37.2 billion) in the first 10 months of last year, surpassing the 40.2 trillion by the nation’s three major super superstores – Emart, Homeplus and Lotte Mart.

The trend continued in November and December, pushing up the yearly total to 50 trillion won, almost double that of the 25 trillion won recorded only five years ago, Statistics Korea reported.

Industry watchers attribute the steep sales growth of online malls to mobile shopping. “The mobile shopping total, which remained at 6.5 trillion won in 2013, more than tripled to 23 trillion won last year,” said an official at Korea On-Line Shopping Association. “During the period, the share of mobile shopping among overall online shopping also increased from 17 percent to 44 percent.”

And this explains why local retailers are targeting “thumb shoppers,” who prefer to finish their shopping chores, ranging from IT equipment to groceries, and even toilet paper, through their mobile phones.

The Lotte Group has recently decided to establish a system called “Omni-channel” – a fusion of its mobile, Internet and offline retail networks – as its new growth engine, and introduced “smart pick” service, which allows consumers to order goods through online malls and pick them up at offline outlets, such as its department and discount outlets.

The Shinsaegae Group has also launched “SSG Dotcom,” letting customers settle their purchases from department stores and discount marts through one payment. “The complicated payment procedures, which have stood in the way to the growth of mobile shopping, have been solved with the latest development of ‘digital pay’ technology, leading to the rapid popularization of smart shopping through smartphones and laptops,” said the association official.

Also contributing to its swift growth is the competition for rapid delivery, started by “rocket delivery” by Coupang, a local online shopping mall, which delivers goods to customers as quickly as two hours after they place their orders.

“Online shopping malls have great potential for further expansion, thanks to their new services, such as recommending custom-made items to customers based on big-data analyses,” said an industry analyst. “Large department stores and hypermarkets will have to transform themselves to survive the fierce competition of online competitors.”