Study: Korean E-Biz Market is Primed

Buoyed by a bounce in its current economic climate, Korean business-to-consumer (B2C) e-commerce will remain "robust" in the coming years, according to a report released Wednesday by the Yankee Group.

As South Korea continues to rebound from the 1997 economic crisis, the study said that a number of factors are leading South Koreans to ramp up their online spending in both domestic and international markets -- including superior infrastructure, a rapidly expanding Internet user base, an increase in value of products bought via the Web, and tightened online security.

For instance, the Boston, Massachusetts-based research firm found that more than a third of those surveyed for the study are already making online purchases on a quarterly basis, while 65 percent of all e-shoppers are part of the key 16- to 25-year-old demographic.

As part of its analysis of specific purchasing habits, Yankee said that 43 percent of the survey respondents cited convenience and the ease of delivery as the primary drivers of conducting online transactions. Moreover, the most popular items bought online in South Korea were music compact discs and tapes.

Help Wanted

Although the Korean B2C space is "very attractive," Yankee said that investment in the area has been slow to arrive.

"Despite the real opportunity for success , few foreign companies have entered the market," said Yankee analyst Aditya Puri. "Interestingly, the extreme nationalism that is often associated with Korean buying habits has not migrated (to the same extent) to the Internet."

On the domestic front, the Chaebol -- which are massive Korean business conglomerates -- have invested "significant" amounts of time and capital into e-commerce undertakings to preserve their supremacy in the online environment. However, the report concluded that in many cases these companies lack the experience of their American counterparts and are in need of expertise from foreign partners or investors.

Net Effect

The Yankee Group study is the latest evidence that Korea's Internet population is exerting considerable influence over the online landscape.

A report released last week by IDC predicted that China and South Korea will bypass Australia as the biggest international business-to-business (B2B) leaders, accounting for just under half the total B2B in the region by 2005, excluding Japan.

Meanwhile, separate data issued earlier this week by Nielsen//NetRatings found that a South Korean Web company had the second-highest number of page views in March, trailing Internet powerhouse Yahoo!. According to the study, the sizable South Korean user base has proven to be an online "force."