In a significant move that could potentially game-change the e-commerce landscape in South Korea, YouTube and TikTok are entering the market by leveraging their vast user base and advanced technological capabilities. The move comes against the backdrop of fierce competition and rapid growth in the e-commerce sector in a country known for high internet penetration and a tech-savvy population.
According to the distribution industry, YouTube has partnered with KOSDAQ-listed e-commerce solutions company Cafe24 to launch a dedicated shopping store feature in Korea. The new feature allows customers to purchase products while watching live commerce or video on demand (VOD), integrating entertainment and shopping into a seamless experience. The partnership follows Google's massive investment of 260 billion won in Cafe24 in December 2022 and marks a strategic move to capitalize on Korea's fast-growing e-commerce market. From January to May this year, YouTube accounted for 33% of the total time spent on smartphone apps in Korea, highlighting its dominance and potential influence in the market.
Meanwhile, TikTok has expanded its market presence since 2021, starting with Indonesia, then expanding into several other countries including the United States, the United Kingdom, and Saudi Arabia. In December 2022, TikTok Shop applied for a trademark in South Korea and built a fulfillment service system, laying the foundation for its official entry into the market. TikTok Shop's global revenue last year was $20 billion, with a forecast of $50 billion this year, highlighting its rapid growth and competitive pressure on the South Korean market.
The entry of these global giants is expected to intensify competition in South Korea's e-commerce market, which is already seeing active activity from other major players. Fast fashion retailer SHEIN officially announced its entry into the South Korean market on June 20 after establishing a South Korean subsidiary in December 2022.
Meanwhile, domestic platforms such as Coupang are investing heavily in logistics infrastructure to expand their Rocket Delivery service nationwide, and Shinsegae Group has restructured its e-commerce subsidiaries GMarket and SSG.com to strengthen their competitiveness.
A source from a domestic e-commerce platform said, “The rise of YouTube could have an impact not only on existing e-commerce platforms, but also on domestic home shopping companies that are expanding mobile live commerce due to a decline in TV viewership.” Sources from a fashion mall platform echoed this sentiment, expressing concern about facing an even stronger competitor as they are already struggling to keep up with “C-commerce” platforms such as AliExpress and Temu.
The distribution industry sees Korea, with its mobile-friendly shopping environment and user base, as an attractive “test bed” for entering the global market. A distribution industry source pointed out, “Various platforms with visitor (UV) bases will enter the Korean e-commerce market, compete, and rise and fall.”
In addition to these moves, 11th Street is set to relocate its headquarters from Seoul Square to Gwangmyeong in September, and Lotte On has accepted voluntary retirement applications for the first time since its founding 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 expected to enter a “warring states era” with no absolute ruler as various global and domestic platforms compete for market share. This era of intense competition is expected to drive innovation and improve the overall shopping experience of Korean consumers, especially the MZ generation, who are a key driver of online shopping trends.
