In the last Coree Affaires magazine, a publication by the FKCCI, Asiance’s CEO Bosun Kim analyzes the new big Korean trend of buying directly overseas. As e-retail is becoming bigger and bigger each month in Korea, overseas direct purchasing competes with and threatens local supply channels in the Korean market. Why do more and more people prefer to buy abroad? Here is Bosun’s explanation.
It’s a fact, Korean people prefer buying goods directly online or in free zones overseas than in local markets. In 2014, direct purchases represented more than 2 billion dollars (in volume), a 100% increase in an industry that was ‘only’ 1 billion dollars in 2013. According to the forecasts of the Department of Customs and Excise, it will exceed 10 billion dollars within five years and will at this point be a full-fledged purchase funnel.
Why this massive change? First of all, because people are becoming wiser when purchasing. They compare the prices, they go online before actually going to an offline store. More and more Koreans are traveling abroad, more speak a second language, and consequently have more opportunities to buy foreign brands online or during their trips overseas. Once at home, they are willing to find the same products, and above all at the same price. On top of that, the free trade agreement between South Korea and the USA signed in 2012 ensures goods detaxation for products whose price is under 200 dollars. From now on Korean people can easily buy foreign luxury products without any extra costs.
So what are the repercussions for our clients? Many are facing intense competition and cannot just look at their local competitors but must also look after international websites selling their own brands. Brands should examine closely their customer’s online journey and try to provide them the best online experience possible, on every device. This user experience makes the difference and can push customers to buy on local websites despite the price attractivity of direct buying purchases. A more technical issue is web hosting choice. It should be selected with great care and adapted to your local market as it will determine the connection speed to your website. Localization and translation of local websites are also keys to success and delivering localized messages is key to engaging in long term relationships with your customers.