Market Trends of South Korea Domestic Courier, Express, and Parcel (CEP) Industry
Increasing Online Retail Sales Driving the Market
Retail sales witnessed significant growth in the country, as in October 2022, retail sales experienced a growth rate of more than 7% when compared to the same period in the previous year. This growth was majorly driven by the rising number of people's outdoor activities and demand for various services due to the eased pandemic restrictions. In addition, in October 2022, according to the Ministry of Trade, Industry, and Energy, the combined sales of 25 major offline and online retailers amounted to more than USD 10.9 billion.
Moreover, the sales from offline stores increased by more than 6%, which was driven by growing demand for fashion items, goods for children and sporting, etc. Meanwhile, in October 2022 sales from online platforms advanced with more than 8% growth, reaching KRW 7 trillion (USD 5.73 billion), with the continuous spread of the contactless shopping trend amid the pandemic. Moreover, in October 2022, online platforms contributed more than 48% of the total sales, which was up by 47% compared to the same period in the previous year.
Moreover, in September 2022, according to statistics Korea, retail commodities such as clothing, Computers, and computer-related appliances, cosmetics, Sports and leisure appliances, etc. online sales witnessed significant growth. Moreover, in Q1 2022, the transaction value of online food and beverage sales reached more than KRW 6.93 trillion (USD 5.63 billion). Thus, the growing online retail sales will drive the domestic express and parcel industry in the country.
Growth In E-commerce Driving the CEP Market
South Korea has been drawing the attention of the global e-commerce industry in terms of growth rate and size compared to the overall consumer market since before the COVID-19 pandemic. Moreover, in Q1 2021, the mobile shopping transaction value in South Korea totaled more than KRW 31.3 trillion (USD 25.4 billion), with food services leading the categories at KRW 5.7 trillion (USD 4.63 billion). Mobile shopping is commonly used in South Korea, and the sector has shown continuous year-on-year growth within the online shopping sphere.
Meanwhile, in Q3 2021, online shopping transactions in South Korea grew by 19.6% compared to the same period in the previous year. In the future, the domestic e-commerce market may have different growth prospects for different product groups, but it is expected to continue to expand in the long term. This is because Korean consumers have already experienced the convenience of online purchases in various product groups, and online and offline distributors are also making continuous investments.
Furthermore, South Korean online retailers are fueling the new trend called live commerce, which combines streaming and e-commerce. However, the country's e-commerce market is expected to reach USD 325.12 billion in 2025. Factors such as increasing internet user penetration, the implementation of AI in retail, expanding urbanization, the escalating trend of online advertising, and increasing smartphone users are expected to drive market growth over the forecast period. Moreover, in 2021, online sales accounted for around 28% of retail sales, indicating further growth in online shopping.
