Korean E-Commerce Continues to Surpass the Rest of the World

Worldwide demand for online goods and services is exploding as traditional buying patterns are being upended by the convenience of e-commerce. But, surprisingly, brands that sell fast-moving consumer goods (FMCG), such as processed foods, toiletries, and over-the-counter drugs, are lagging in their migration to online shopping.

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That’s because consumers and businesses are still adjusting to the concept of purchasing FMCG products online as compared with other product classes, said Monica Peart, senior forecasting director at eMarketer. It has also taken longer for retailers to become adept at the logistics of delivering such goods within a reasonable time frame, she told CMO.com.


One standout, however, can be found in East Asia, according to the report “Future of E-commerce in FMCG,” by retail research firm Kantar. South Korea is the world’s largest online FMCG market by value share. In comparison, the United States is only at 1.4% and e-commerce still accounts for a paltry 4.4% of global FMCG sales, the report revealed.

Secret Sauce

So what does South Korea know that the rest of the world does not?

According to Stéphane Roger, global director of shopper and retail at Kantar, the country is a “fully digital society” whose tech-savvy populace has been operating in the online world longer than those in other countries.

Speedy tech uptake, in fact, is a common trend in South Korea, as demonstrated by the country’s swift social media adoption. Before Facebook and even MySpace, Korea was congregating on the now-defunct Cyworld, which at one point had more than 20 million users in a country of 50 million people.


In addition, beyond the country’s world-record internet speeds and staggering 85% smartphone penetration rate, almost 100% of consumers ages 10 to 40 shop online, especially via mobile, Roger noted in the report.

South Korea shows no signs of slowing down, either. Kantar predicts its share of the FMCG e-commerce market will surge to 25% of global sales over the next decade.

“Korea has a highly dense population confined to a small geographical area,” added Joshua Peacock, managing director at Iris Worldwide, in Seoul. “This ensures that there are simpler logistics involved when it comes to fast fulfilment and service. It has also created an environment where there is a lot more competition and less of a monopoly from a single e-commerce giant, such as Amazon in the U.S.”

Brands in the region also understand the power of an intimate customer experience. Peacock cited Korean e-commerce platform Coupang as an example.

“Coupang actually built its business from the ground up on customer service,” he told CMO.com. “Its service-delivery staff acted as brand ambassadors, hand-delivering product samples and written thank-you notes to people’s homes.”

Want In?

For CMOs looking to expand their e-commerce offerings into South Korea, be it in FMCG or any market segment, Peacock offered the following advice: Bring your A game.

“To win, you will need a world-beating solution and a clear point of differentiation,” he said. “You will also need to adopt a Korean style of business management where you evolve constantly and are nimble enough to react to constantly changing market dynamics and strong competition.”

The key, Kantar’s Roger added, is to get in while you can.

“In previous years, we have stressed the urgency for packaged goods retailers and brands to invest swiftly and decisively in e-commerce,” Roger said. “We demonstrated that the FMCG e-commerce market is unkind to latecomers.”

A version of this article also appeared on Adobe’s CMO.com 

Bobby McGill

Bobby McGill

Bobby is the founder and publisher of Branding in Asia.

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