YouTube and TikTok Enter Korean E-Commerce Market, Sparking Industry Shake-Up

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YouTube and TikTok are making their entry into the Korean e-commerce market.

In a significant move that could reshape the Korean e-commerce landscape, YouTube and TikTok are making their entry into the market, leveraging their massive user bases and advanced technological capabilities. This development is set against a backdrop of fierce competition and rapid growth in the Korean e-commerce sector, which is known for its high internet penetration and tech-savvy population.

According to distribution industry on June 23, YouTube has collaborated with Cafe24, a KOSDAQ-listed e-commerce solution company, to launch a shopping-exclusive store function in Korea. This new feature allows customers to purchase products while watching live commerce or video on demand (VOD), integrating entertainment and shopping in a seamless experience. This collaboration follows Google’s substantial investment of 260 billion won in Cafe24 in December 2022, signaling a strategic move to capitalize on the burgeoning e-commerce market in Korea. From January to May this year, YouTube accounted for 33% of the total smartphone app usage time in Korea, underscoring its dominance and potential influence in the market.

TikTok, on the other hand, has been expanding its market presence since 2021, starting in Indonesia and extending to several other countries, including the U.S., the U.K., and Saudi Arabia. In December 2022, TikTok Shop applied for a trademark in Korea and established a fulfillment service system, laying the groundwork for its formal entry into the market. TikTok Shop’s global revenue last year was $20 billion, with a forecast of $50 billion for this year, highlighting its rapid growth and the competitive pressure it brings to the Korean market.

The entry of these global giants is expected to intensify competition in the Korean e-commerce market, which is already witnessing significant activity from other major players. Shein, a fast-fashion retailer, officially announced its entry into the Korean market on June 20, following the establishment of a Korean subsidiary in December 2022.

Meanwhile, domestic platforms like Coupang are investing heavily in logistics infrastructure to expand their Rocket Delivery service nationwide, and Shinsegae Group has reorganized its e-commerce subsidiaries, Gmarket and SSG.com, to enhance competitiveness.

A representative from a domestic e-commerce platform commented, “The rise of YouTube could impact not only existing e-commerce platforms but also domestic home shopping companies that are expanding mobile live commerce due to the decrease in TV viewers.” This sentiment is echoed by a representative from a fashion specialty mall platform, who expressed concern about facing even stronger competitors while already struggling to respond to ‘C-commerce’ platforms like AliExpress and Temu.

The distribution industry sees Korea as an attractive “testbed” for global market entry due to its mobile-friendly shopping environment and user base. “Various platforms with a visitor (UV) base will enter the Korean e-commerce market, compete, and rise and fall,” noted a distribution industry representative.

In addition to these developments, 11st Street plans to move its headquarters from Seoul Square to Gwangmyeong in September, and Lotte On has accepted voluntary retirement applications for the first time since its launch in 2020. Qoo10 is also expanding its overseas direct sales business, further contributing to the dynamic and competitive nature of the market.

The Korean e-commerce market is predicted to enter a “Warring States period” with no absolute dominant player, as various global and domestic platforms vie for market share. This period of intense competition is expected to drive innovation and enhance the overall shopping experience for Korean consumers, particularly the MZ generation, who are significant drivers of online shopping trends.