Global tech giants are vying for dominance in South Korea’s booming e-commerce market

SEOUL, June 25 (Korea Bizwire) – In a surprising turn of events, South Korea has become the latest battleground between global e-commerce giants, with YouTube taking the unprecedented step of launching the country’s first dedicated shopping store feature.

On June 23, industry sources revealed that YouTube, in cooperation with Cafe24, a KOSDAQ-listed e-commerce solutions company, has introduced a shopping store feature in South Korea – a world first on the platform.

This new feature allows customers to seamlessly purchase products while watching live trading or video-on-demand content, a significant evolution from the previous method of redirecting users to separate online stores.

YouTube’s entry into the Korean e-commerce market follows in the footsteps of Chinese platforms such as AliExpress, Temu and Shein, intensifying competition in an already crowded field.

The decision to debut the feature in South Korea rather than YouTube’s home market of the United States or Europe has drawn attention from industry insiders.

Google, YouTube’s parent company, invested 26 billion won in Cafe24 last December, signaling its commitment to the venture.

This direct investment in a publicly traded company, regardless of nationality, is considered unusual by Google and has led to speculation that South Korea is an outpost of YouTube’s e-commerce expansion.

The potential impact of improved shopping features on YouTube is significant. According to WiseApp Retail and Goods, YouTube dominated 33% of total smartphone app usage time in South Korea between January and May this year.

Its strong appeal to the coveted MZ generation (born between the early 1980s and early 2000s) suggests that YouTube could reshape the national retail landscape in the medium to long term.

An official of a prominent national e-commerce platform highlighted the concerns, stating: “The rise of YouTube poses a serious threat not only to existing e-commerce platforms but also to domestic home shopping companies. As TV viewing declines, these companies are increasingly focusing on mobile live commerce.”

Meanwhile, YouTube’s rival TikTok is also making moves in the Korean market.

TikTok Shop, which combines TikTok’s short video platform with e-commerce functionality, is expected to launch in South Korea by the end of the year.

The platform has already registered a trademark in the country in December last year and is starting to roll out order fulfillment services.

Adding to the competitive landscape, Shein, a Chinese online clothing retailer, officially announced its entry into the Korean market on June 20.

In December 2022, the company established a Korean subsidiary and has been conducting marketing activities on social media since August last year.

In the face of this increasing competition, national platforms are scrambling to adapt. Shinsegae Group has changed the management of its e-commerce subsidiaries, Gmarket and SSG.com, in a bid to revitalize their businesses.

Facing significant challenges from its competitors, Coupang, the largest player in the Korean e-commerce scene, is expanding its signature Rocket Delivery service nationwide and investing in logistics infrastructure.

Other domestic companies focus on improving profitability.

11Street is implementing voluntary retirement programs and moving its headquarters from Seoul Square opposite Seoul Station to the suburb of Gwangmyeong, while Lotte ON is offering voluntary retirement for the first time since its launch in 2020.

Industry experts predict that the Korean e-commerce market is entering a period of intense competition with no clear dominant player.

As one industry insider noted: “South Korea, with its mobile-friendly shopping environment and user base, represents an attractive “testing ground” and outpost for expansion into the global market. We expect that various platforms with established visitor bases will enter and compete in the Korean e-commerce market, with some gaining prominence and others fading away.”

Kevin Lee ([email protected])