A 1.2 Million Won Laptop for 500,000 Won... Rapid Growth of the Overstock Shopping Market

COVID-19 Shrinks Consumer Sentiment, Increases Corporate Inventory
Rising Inventory Burdens Companies, Industry Actively Seeks Solutions

[Asia Economy Reporter Lim Hye-seon] Amid the prolonged recession caused by the novel coronavirus infection (COVID-19), the 'inventory shopping market,' which sells companies' stock products at high discount rates, is growing.

According to the industry on the 13th, the Korea Economic Research Institute analyzed the financial statements of 685 KOSPI-listed companies last year and found that the average inventory assets held by listed companies reached approximately 99.9 trillion won, the highest ever. The average number of days inventory turns into sales increased from 25 days in 2017 to 31 days last year. Additionally, the inventory turnover ratio, which indicates the speed at which inventory is reflected in sales, decreased from 14.3% to 11.5% during the same period.

The situation worsened due to COVID-19. As overseas travel was restrained, the increase in duty-free shop inventory also grew. A Customs Service official estimated that as of April, the scale of long-term inventory duty-free goods over six months amounted to a total of 900 billion won. As this situation continued, the Customs Service temporarily allowed the sale of long-term inventory goods domestically to reduce stock and secure additional liquidity. On the 3rd, Shinsegae Duty Free sold inventory items at up to 50% discount, resulting in 93% of all items being sold out.

Rethink Mall, which specializes in selling corporate inventory products, refurbished items, and products nearing expiration dates, also saw an increase in sales and transaction volume immediately after the outbreak of COVID-19. According to Rethink Mall, when comparing data from November last year to January this year and from February to April, sales and transaction volume each increased by about 20%. This is because companies were able to relieve the burden of dead stock, increasing supply, and consumers increased purchases as they could obtain various good products at exceptional prices.

Currently, on Rethink Mall online, a smart TV worth about 2 million won is sold at about 430,000 won, an approximately 80% discount, and a laptop worth about 1.2 million won is sold at 500,000 won, a 60% discount, with some products discounted up to the 90% range. Rethink Mall sells a variety of products including home appliances, food, cosmetics, clothing, and shoes.