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Online Market Growing Exponentially

Posted May. 30, 2006 03:08,   


100 Million Won Market Expands to 10 Trillion Won in Just a Decade—

Such changes do not apply to Mr. Kim alone.

The Korean online business market has exploded in just 10 years since June 1, 1996 when the first-ever online shops, Lotte.com and Interpark, commenced business.

There were only two online shops initially, but this number has jumped to 4,403, and the transactions that amounted to less than 100 million won annually was, as of the end of last year, 10.4 trillion won, an amazing growth of over 100,000-fold.

The number of customers has also greatly multiplied.

According to the National Internet Development Agency of Korea, the number of Internet users was 7.31 million in 1996, and it rose to 33.01 million last year. In other words, three out of four Koreans are using the Internet.

Over half of Internet users, or 51.2 percent, have at some point used online shopping. That translates into about 17 million users buying something online.

Online shops have also become a “national shop” that transcends all age groups.

Such trend can be confirmed by the age distribution of Interpark’s members. In the early stages, or 1997, members in their 30s comprised the overwhelming majority with 63 percent of total membership. The age group has become more diverse with currently those in their 20s as the majority with a share of 42 percent, followed by those in their 30s with a 32 percent share. Six percent of members are teenagers, while 15 percent are in their 40s.

Recently, online shopping by the older generation, or those above 40, is gradually increasing. This leads to a trend that senior Internet users are becoming important online customers.

Selling and Buying Everything from Books to Apartments—

In the early era of online shopping, most of the goods sold were merchandise easy to deliverer,

CDs, books, and tickets, which are products that rarely become damaged during delivery and are seldom returned, were popular back then.

However, with the evolution in delivery technology and the growth in the market, the products sold online diversified.

After 2000, delicate products that are easily susceptible to damage like digital cameras, Christmas trees, MP3 players, and robot vacuum cleaners became popular products of online shops.

Recently, even real estate such as apartments has been transacted online.

Consider the Pangyo New City apartment subscription which started on March 29 of this year. Eighty-eight percent of applicants, or 411,628 out of a total 465,791, submitted their subscription applications through the Internet.

Konkuk University Graduate School Real Estate Studies Professor Choi Min-seop forecasted, “Real estate transactions done online will increase, in particular around renting housing because it is relatively easy to acquire objective information.”

Ubiquitous Online Shopping—

Internet experts paint the online market’s future as, “The future of online shopping, where products are bought any time, anywhere, without being actually seen or touched, is infinite.”

Gachon University of Medicine and Science computer software professor Hwang Hee-jung commented, “Due to the development of IT, a ubiquitous era, where people can connect online any time, anywhere, will soon arrive. In such environment, it will be possible to shop online, even while walking, just by using a mobile phone or some other device.”

Online products were mostly manufactured goods, but they are now expanding to fresh groceries and services.

Samsung Economic Research Institute researcher Kim Jin-hyuk said, “The future of online shopping will be centered around e-market places, where the buyer is also the seller. The number of buyers who will not suffer anxiety after buying products without touching them will also greatly increase.”

Dark Shadows of Online Shopping—

Just as the size of online market grew exponentially, so did the shadows it cast. When rumors circulated that online market could reap good profits, swindlers started to operate online.

The 2003 “Half Plaza case” is one example of an online shopping scam. At the time, online shop Half Plaza sold electronic products for half-price for a while, and after it became famous, it embezzled 31 billion won from 96,000 members who paid for non-existing products.

There was also a recent incident in which an online adult movie provider claimed to hold the “World Cup Semi-quarter Final Wishing Draw” and charged 30,000 won in mobile phone bills to users who applied to the draw.

Furthermore, adult products and weapons are sold in online shops frequented by adolescents. There also cases of investing customer’s temporary funds for other purposes as well as sending indecent advertisements.