At first glance, South Korea, as a market, is an eCommerce merchant’s dream.
The country represents the third-largest market in Asia, with an installed base of 51 million relatively affluent consumers, skewing younger and decidedly tech-savvy.
Mobile devices are well-entrenched (wielded by 85% of the population), and many of these individuals and households are enamored with Western and international brands.
But as Worldline Head of eRetail Mike Goodenough told Karen Webster, there’s a difference between realizing a market’s potential and being able to capitalize on it.
“Some markets are easier than others,” he said, adding that “localization solves many problems” as merchants aspire to offer a smooth and frictionless consumer experience.
Easier said than done. As he noted, cards are still king around the world, which gives merchants at least some runway into new markets as they offer Visa and Mastercard. The only real challenge is the fact that these same retailers will have to take on the costs tied to processing those transactions.
But even though cards are still 80% of all transactions in South Korea, there are still some nuances that must be navigated by enterprises. One key difference in South Korea is that half of the cards issued are done so with a local brand, he said. That means that merchants processing card transactions might “hit” only 40% of the consumers.
True localization means that in establishing presence in a new country (South Korea among them), firms must make a point of adhering to regulation and local tax laws, putting warehouses in a place that can be a challenge and a hurdle.
First Thing’s First
And indeed, those merchants may want to establish a soup-to-nuts operation across the board — eventually. But first thing’s first.
To really gain a foothold, there needs to be localization that focuses on the consumer — an overarching philosophy that means consumers can use all the payment methods they like to use, regardless of who they are purchasing from, he said.
And it all goes far beyond the confines of offering Apple Pay and Google Pay or even Samsung Pay. Traditional card installments or buy now, pay later (BNPL), for example, continue to gain traction in the country, especially as the basket value goes up.
“If you can offer the consumer a local experience from a shopping point of view, from a payments point of view in the local language and the local currency, that’s enough,” he said.
Contracting with a payments service provider (Worldline among them) over the short term can give that local feel to the consumer in a first step that leaves a positive experience, checkout by checkout.
First impressions count, after all, and a localization strategy can pay dividends as merchants cement trust with their consumers.
“These consumers in the Generation Z have a huge appetite for Western brands, for electronics, for fast fashion,” he said.
To reach those younger consumers, said Goodenough, brands (especially global brands) are embarking on a slew of ways to get their attention, through live shopping and social media, and other ways to bring purchases “inside” of various interactive environments.
The seamless continuum of browsing, choosing and paying, with several steps removed from the process, has been transforming industries as old school as the automotive sector, refashioning the cumbersome and high-touch dealer experience for a speedy, digitally enabled and even enjoyable online interaction.
Live shopping, for example, accounts for about 50% of all eCommerce purchases in China and is gathering steam in North America, buoyed in part by the pandemic and the fact that so much commerce has been done outside the brick-and-mortar environment. In South Korea, especially, platforms such as Naver Shopping Live and Kakao Shopping Live are proving especially popular, as estimated by firms including Statista.
Embedding payments into the mix, he said, can help seal the deal, without having to disrupt the flow of commerce by forcing consumers to move to separate screens to choose payment methods.
Fashion brands are pointing the way toward fully formed contextual experiences, he said. Linking up social contacts within an app, watching live shopping events, being offered rewards and points and access to exclusive events can all boost customer loyalty.
Looking ahead, he said, as merchants eye South Korea, “if we can make their go-to-market investments as small as possible by allowing them to give a true local experience without the big investment of warehousing and local entity and local tax and worrying about [foreign exchange (FX)] conversion, then, well, it’s a much simpler decision for them to make.”