Sunday, January 16, 2011

Amazon.com in Korea? Unlikely, Here's Why (Update 1)

Need to find the fair price of ANYTHING?  Look no further.
It isn't perfect competition, but it is as close as the average consumer can get.  Anytime that I am going to buy anything other than food, I always go to www.amazon.com.  Always.  Why is that?

Comparison shopping done easily
The choices in the U.S. are dizzying.  Dozens of sites for virtually every item.  However, Amazon.com has put together a site which is consolidates other online stores which have partnered with Amazon.  None of this matters to an American consumer: shipping is often free, and a very competitive price can be found on virtually anything that you need to buy.  Shipping?  Free if the purchase is above a certain amount.

Why oh why nawayo.co.kr and gmarket.co.kr Aren't Even Close
Besides being highly annoying from a visual standpoint, Korean shopping sites are inconvenient at best.  If you are not convinced, look here. Once you get beyond the annoyance factor, there are still reasons why these sites and individual online sellers do not succeed in Korea.  First, fads burst onto the scene and recede into obscurity with blinding speed.  Remember the LG Chocolate?  Neither does anyone else in Korea.  That makes it very risky for online sellers to retain inventory.  Second, it is very difficult to level the playing field against the largest Korean companies.  In other words, small niche companies find it very difficult to evolve into viable entities in Korea.  As a result, the offerings at nawayo.co.kr and gmarket.co.kr are simply the same items from virtually every seller.  Third, import taxes remain a barrier.  The Seoul Gyopo Guide has strongly supported the passage of the KORUS FTA because the effect on everyday Koreans is higher inflation, and fewer choices that result.  Korean retailers also have fewer choices because they cannot afford the risks of carrying more-expensive items.  Those retailers are correct to be afraid, since the FTA should bring down the selling prices after FTA passage.  Those especially at risk are the large department stores that currently carry U.S. brands.  Depending upon the price of shipping, it may actually be cheaper to purchase certain items on Amazon.com and have them shipped to Korea.

Conclusion
Perhaps the Seoul Gyopo Guide should give Korean shopping websites a break.  It isn't necessarily the sellers' fault that they have limited access to high quality inventory.  What other way is there to get the attention of the potential buyers for identical products?  Until Korea enjoys a truly competitive marketplace, an all-encompassing website like Amazon.com may be an impossible dream.

1 comments:

Kwang Seob said...

Wow... so accurate. lol don't know what to add more... As a South Korean who has lived there for 15 years and came to States for High school and staying here as a college student right now, your analysis is very concise and accurate.

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