What: The Robin Report reviews the state of the business in Korea, a notoriously digital market.

Why it is important: mobile and high-speed broadband penetrations in the country are among the world’s tops. For that reason, looking at the evolution of the retail market there can give some hints on what could happen in the rest of the world.

Dongdaemun in Seoul, encompassing about 30,000 fashion shops, epitomizes the growth of Korea's fashion sector. Despite the rise of Korean fashion brands, local retailers face challenges from Chinese online platforms like Alibaba, Temu, and Shein, which offer lower prices and greater convenience. This competition highlights the limitations of Korean e-commerce innovations against large-scale operations.

Korean e-commerce has thrived on high broadband and 5G penetration, with mobile transactions constituting 75% of the $166 billion spent online in 2023. Innovative online models and KOL-driven marketing have fueled the "Hallyu" wave, significantly contributing to Korea's cultural exports and a $10 billion beauty market.

However, Korean platforms are struggling domestically as savvy shoppers increasingly turn to Chinese sites, which now rank among the top e-commerce traffic sources in Korea. The struggle has led to bankruptcy filings by businesses like Linkshops and potential acquisition interests from Alibaba in platforms like Ably Corp. Additionally, Korea's protective trade measures against foreign e-commerce might backfire, potentially inviting retaliatory actions from China, further impacting Korean cultural exports and businesses.

Korean online retailers are compelled to adapt to survive by enhancing their reach and competitiveness in pricing, amidst a market driven by consumers proficient in navigating global online spaces.

Is the Korean luxury and fashion market falling victim of e-commerce?