“Can’t Buy Something at Local Market? That’s OK, I’ll Click”

Expectant mother Kim Su-yeon (31) recently bought a baby sling from an online shopping mall for overseas goods.

“I saw Angelina Jolie holding a baby with a sling in the picture. I heard it is only sold in America. So I ordered it through an online shopping mall for overseas items,” she said.

These kinds of online shopping brokerage sites purchase and deliver overseas items for domestic customers and are known as purchase service agencies. Online sales now reach 500 billion won annually. Some online shopping malls have been listed on the Korean Stock Exchange. It is unprecedented to see the listing of such shopping malls in Korea’s business history.

The number of such malls has grown from four in 2004 to 497 in 2007.

The boom in this business is largely supported by the growing number of overseas travelers and people who spend long-term stays in foreign countries. That has driven up the number of customers purchasing foreign brands not available in the domestic market.

The number of online shopping brokerage sites increased from mere four in 2004 to 191 in 2005. Recently, it has grown to a record 496 as of October this year from last year’s 343.

Delivery time has fallen for globally popular items. Britax car seats, which are the first in sales at Amazon.com, the U.S. online shopping mall, are widely bought by Korean mothers. American jean brands ‘Seven for All Mankind’ and ‘True Religion’ were introduced in the Korean market through online shopping malls. Since then, Korean consumers have rushed to buy these so-called premium jeans.

Golf club sets, DSLR cameras, flat TVs, and other luxury items are also popular. Once consumers could only purchase goods from the U.S. But now they can buy diverse items from Canada (vitamins and cosmetics), France (clothes and shoes), Japan (baby items and compact consumer electronics), and Italy (luxury brands).

As the market is growing fast, established online shopping malls like KTCommerce (njoyNY), Lotte.com (Tokyoholic), Gseshop (Plain), and D&Shop (Phobos) are paying attention to online shopping malls for overseas items.

The top retailer in the industry is Wizwid, which was listed on KOSDAQ on December 5. It started as a venture under the MBE division of SK Networks, and now its market share is 48 percent. Kim Jong-soo, then head of the firm’s strategic business division and incumbent representative of the company, was a typical business traveler. He created an in-house venture ‘Wiz address’. The idea started from the inconvenience that he couldn’t buy goods from on-board shopping catalogues if they were not delivered to Korea.

The venture company distributes items purchased by customers to America and then those items are repackaged in logistic centers of Wiswid to be delivered to the Korean market. Six months after the service was launched, it has evolved into an unprecedented business model in Korea.

With only a click, Korean consumers can receive goods from overseas markets. And they are getting hooked on the service. After spinning-off from the SK Group in 2004, the firm has grown at an annual rate of 20-50 percent.

Kim Yang-phil, head of the marketing division at Wizwid, said, “We will raise funds from our KOSDAQ listing to secure overseas logistics hubs and then we will export our purchase service agency products.”

wiseweb@donga.com