Grocery Deliveries Now Worth W1 Trillion

The rapid growth of online shopping is changing the face of retail in Korea.

Online shopping transactions in November last year surged 20.2 percent on-year to W12.8 trillion, surpassing W12 trillion for the first time (US$1=W1,158).

But total retail sales rose only 2.9 percent over the same period, so now the proportion of online shopping has risen from 20.5 percent in November 2018 to 23.1 percent in the same month last year.  In the first quarter of 2013, the first time statistics were tallied, they were worth less than W9 trillion.

One 42-year-old working mother in Seoul has not shopped in a supermarket for more than two months. Just two years ago, she shopped there once a month but now purchases most of her necessities online, from soap to meat and vegetables.

"I compare prices and choose the cheapest products and they are delivered quickly to my doorstep, which is very convenient," she said. "Going to the superstore took up a lot of time, and I often ended up buying things I really didn't need, so one advantage of online shopping is that I'm not tempted to buy more than I need."

Most of it is done by phone or tablet PC. Mobile shopping surged 28.1 percent on-year in November to W8.41 trillion, and its proportion of total online shopping rose from 61.9 to 65.9 percent.

The most popular products are clothes and cosmetics with sales totaling W4.34 trillion in November to account for 34 percent of all products bought online. But food purchases increased at the fastest pace. A total of W1.49 trillion worth of food products were bought online in November, up 26.5 percent on-year, while grocery sales doubled to surpass W1 trillion.

In the past, it was thought that food could not be sold online because customers want to see and perhaps feel what they are buying. But that is changing, thanks in part to clever packaging.

A survey by the Korea Rural Economic Institute of 2,016 households last year showed that the proportion who said they never bought any products online fell from 58.4 percent in 2018 to 43.2 percent in 2019. The proportion that buy processed food online more than once a month rose from 72.4 percent in 2018 to 78.6 percent in 2019.

"Consumer fears about food bought online seem to be waning, and the Internet is gradually becoming the main channel for food sales." And while overall private consumption remains in the doldrums, online shopping continues to grow rapidly, leading to huge shifts in the market and hiring practices.

Kim Kwang-suk at the Institute for Korean Economy and Industry said, "We will see a restructuring of weak manufacturers and retailers, while advances in payment technology will usher in a cash-free society." But Kim Tae-gi at Dankook University warned, "We need protect small businesses who will lose jobs."