Online Platforms 

Source: pixabay

Source: Statistics Korea

Unit: KRW 1 trillion

Online Platforms

Korea has various types of online shopping platforms, such as open markets, general malls, and specialty malls. While this does not make a great difference to consumers, understanding the platform and format can assist in making key decisions when planning to do business via Korea’s online platforms.   

1. Open Market         

An Open Market is a platform provided to B2C businesses. Some examples are Coupang, 11st and Gmarket. The business model is similar to a department store, where the platform owner provides space for products in their online shop. The advantage of the open market model is that there is less limitation on platform entry for even overseas vendors. The massive number of members of these major platforms provides brand visibility just by being listed. Although entry to these platforms is easy it also causes competition, especially with regard to pricing. Buyers can compare price differences easily, but it is harder to compare quality.

2. General Malls

General Malls usually purchase beforehand and stock the products they sell. Most of general malls are organized by offline distributors. For example, general malls SSG and Lotte Mall both are owned by major Korean offline wholesale distributors. The greatest advantage for these would be their well-established distribution and logistics lines, which make it possible for products to be delivered faster, an advantage with products that may expire. Major distributors have their own quality control and provide improved brand recognition for the online shopping mall they manage. More fresh food is purchased on general malls compared to open market platforms. 

3. Specialized Malls

Specialized Malls, as the name of the platform implies, are online shopping malls with specific types of products. These platforms commonly have fewer options and categories on offer than the general malls or open markets. However, supplying small quantities makes it possible to put more emphasis on quality. Because they have reputations for providing specialized products with quality, consumers tend to have trust in the featured products and companies such as Bucketplace, ABLY, and Musinsa.

4. Other Platform Types

There are additional platforms in the online shopping market which fall outside these categories, such as Naver Shopping, which is one of the most frequently-used platforms for online shopping, but cannot be considered an online open mall or general mall. While a user will be able to compare prices and products from all different types of shopping mall platforms and purchase them, Naver Shopping’s main profit is from its bundling with its proprietary payment system Naver Pay.

Another type of platform experiencing some growth is the Kakao Store, which is based on a O2O (Online to Offline) business. Originally a mobile messenger service similar to WhatsApp or Wechat, Kakao also provides a service for users to purchase online coupons for products that can be redeemed in certain stores. The service can also gift these coupons to other users who would physically visit the stores to receive the products. 

Even though these online platforms each have their distinctive characteristics, they are also frequently adapting their businesses to address weaknesses and expand traffic. Compared to when these platforms were first introduced, they are becoming less distinguishable from each other. 

Below are more details about Korea’s top two online platforms.

 Coupang

Coupang is considered the Korean Amazon, and is the leading online shopping mall in Korea. Foreign entities are able to list their products on Coupang’s platform as third-party marketplace sellers even without a Korean business license or a domestic bank account.

https://marketplace.coupangcorp.com/

There are several document required to register as a seller with Coupang. These are:

1. 1. 1. Valid Business License 

      2. Proof of Business Ownership

      3. Identification of Business Owner

      4. Bank Statement

 Naver Shopping

Naver is Korea’s largest online search portal, and also provides one of the largest shopping platforms in the country. Naver Shopping provides a service where members can directly compare products from various shopping malls on the Naver Shopping site.

https://sell.smartstore.naver.com/#/home/about

Naver Shopping also requires several documents from foreign companies to list products on its platform. These are:

1. Copy of the Business Owner’s Passport

2. Copy of Business license (for the U.S., IRS documents)

3. Copy of Bank Book (or foreign account certification)

*All documents must be in English   

With COVID-19, online shopping has become a part of life and is expected to increase. An Online shopping mall may be an option worth considering to test the waters in the Korean market. Registering to platforms in Korea can be easy but if not targeted or marketed to the right audience the effort might not be worthwhile. As a business development consultancy, IRC Consulting stands ready to support foreign entities entering the Korean market with over 40 years of experience. We welcome any inquiries regarding the Korean market and can help if you want to learn more about Korea’s business culture. Please contact us by visiting ircconsultingkorea.com or send us an email at contact@ircconsultingkorea.com.

For more information regarding the import process please visit 'Korea's Online Imported Goods Marketplace'. In our next article, we will talk about the online payment systems in Korea.