"How Much Did You See?" No Such Question at the Electronics Market This Year

GeForce 3000 Series Halved in Price by Drastically Reducing Distribution Process
Initially Expected to Reach 2 Million Won, Sold at 900,000 Won on Coupang
Distribution Method Changed Amid Rising Criticism of Overseas Direct Purchase and Importers Due to Price Fluctuations

[Asia Economy Reporter Lim Hye-seon] Electronics companies such as those dealing in computers, graphics cards, and mobile devices are bypassing traditional collective shopping districts and partnering directly with large e-commerce and distribution companies to skip complex distribution processes and handle distribution themselves. Since they do not go through general distributors or intermediate wholesalers, the final consumer prices have dropped by nearly half, drawing enthusiastic responses from consumers. While businesses located in collective electronics markets are raising their voices, calling this a 'small business killer' that ignores existing distribution processes, there are also calls to improve the uniquely complex distribution stages of electronics markets.

Graphics Cards Half Price by Removing Middle Distribution

According to the distribution industry on the 23rd, graphics importer Intac & Company sold the new NVIDIA GeForce RTX 3000 series graphics cards on Coupang for around 900,000 KRW. The industry had expected the price of this product to easily exceed 2 million KRW. Although similar prices are seen overseas, considering the traditional graphics card distribution process, a price more than double was anticipated. According to the distribution industry, imported computer parts and electronics go through six stages: manufacturer → importer → general distributor → intermediate wholesaler → retailer → consumer. Each stage adds an appropriate margin, so even if the importer sets prices similar to overseas sales prices, the final consumer price ends up more than double. Intac & Company handed over all imported stock to Coupang, which sold directly to consumers, reducing the price to less than half.

China's electronics company Xiaomi's 'Mi Band 5' is a similar case. The 'Mi Band 5' also bypassed the complex distribution process, with the importer directly supplying stock to Coupang and Auction, setting the domestic launch price at 39,900 KRW. This is not significantly different from the local price in China. Previously, electronic products like the Mi Band that did not go through direct distribution formed prices nearly double the local Chinese price due to complex distribution stages. Because imported computer parts and electronics have limited distribution channels such as collective electronics markets, prices fluctuated widely, and consumers had no choice but to purchase reluctantly.

The Real Crisis for Electronics Markets

The reason electronics importers are turning to large online distributors like Coupang and Auction instead of electronics markets is that they can stabilize prices and build trust with customers. Especially after the COVID-19 pandemic, demand for key computer components like graphics cards increased, and perceptions of online purchasing changed, allowing importers to achieve stable sales. One importer of electronic products said, "Because prices fluctuated wildly through complex distribution processes, consumers often purchased products through direct overseas purchases or sharply criticized importers. For products like graphics cards sought by some enthusiasts, prices fluctuated particularly much, so we are considering directly supplying large online distributors to stabilize prices."

Given this situation, voices warning that collective electronics markets are facing a real crisis are growing louder. In home appliances, the leadership has already shifted to large online distributors, and recently, smartphones are increasingly sold directly by the three major mobile carriers or purchased online, further shrinking the position of collective electronics markets. Moreover, if items with lower sales volume but high margins, such as computer parts, are also handed over to large online distributors, there is concern about potential closures.

Recently, even used electronics, which previously required visiting stores in person, can be purchased at E-Mart's Electromart, further narrowing the electronics market's presence. Electromart launched 'Renewal PC' last month, selling various products at reasonable prices. Intel gaming PCs are available for 500,000 to 700,000 KRW, Ryzen gaming PCs for around 800,000 KRW, and MacBook Airs are offered in the 300,000 KRW range. There is a hands-on zone for direct experience, and laptop trade-in is possible. A service lounge is also available, providing after-sales service for Renewal PC products for a certain period.

A distribution industry official said, "PC parts that were only available at electronics markets are now being sold by large distributors, stabilizing prices," adding, "We expect cases where consumers suffer from high prices due to distribution margins to decrease."