Overseas Direct Purchase Market Expected to Surpass 4 Trillion Won This Year
Won Strength Boosts Revenge Spending Sentiment
Polo Ralph Lauren Offers 40% Preemptive Discount for Three Days
Popular Items Include TVs, Gaming Electronics, Speakers
Domestic Retail and Fashion Industries Counter with Large-Scale Discount Deals
[Asia Economy Reporter Cha Min-young] "Jiklin-i (a portmanteau of overseas direct purchase and child), we succeeded in our first Black Friday." On the night of the 26th, dozens of certification posts about successfully purchasing products from the global clothing brand 'Polo Ralph Lauren' appeared on an online community where overseas direct purchase enthusiasts gather. Purchase reviews continued not only for popular clothing brands such as '& Other Stories,' 'Lululemon,' and 'Sandro,' but also for 'Apple' AirPods and 'Marshall' Bluetooth speakers. 'Smart shopping' tips on how to wisely use additional 15% discount benefits and free shipping options provided by domestic open markets and direct purchase platforms also made the list of popular posts.
Easily Surpassing the 4 Trillion Won Threshold... Currency Arbitrage and Revenge Spending
According to the industry on the 27th, the domestic overseas direct purchase market size is expected to comfortably exceed 4 trillion won this year. According to Statistics Korea, the cumulative overseas direct purchase amount in the third quarter was 2.8519 trillion won, an 8.2% increase compared to the same period last year (2.6369 trillion won). The fourth quarter includes major shopping events such as China's Singles' Day (November 11), the U.S. Black Friday (November 27), and Christmas (December 25), which account for a large share of consumption. The economic merit due to the strong Korean won has also emerged. The won-dollar exchange rate closed at 1,105.80 won on the 27th in the Seoul foreign exchange market. The won-dollar exchange rate approached the 1,300 won level in March when COVID-19 concerns increased but has since fallen to a yearly low. With the third COVID-19 pandemic wave leading to travel and outing restrictions domestically and abroad, there is high expectation that domestic consumers, whose consumption was blocked, will turn to shopping.
Banners on the websites of the famous American department stores 'Macy's' and 'Nordstrom' indicating that shipping to Korea is available. Both sites provide prices converted to Korean won.
The fastest mover was Amazon, the world's largest e-commerce company, which officially announced its entry into Korea in partnership with 11st. Amazon started a promotion on the 18th at midnight, offering free shipping to Korean customers who purchase Amazon.com’s own products totaling over $99. It is speculated that this is for data collection on Korean consumer preferences ahead of collaboration with 11st. Popular products on Amazon include electronics such as TVs and gaming electronics with large discounts, laptops, SSD external drives, Bluetooth speakers, and earphones. Domestic direct purchase specialist platform Malltail expects high demand this year for high-priced camping equipment, supplements, and health functional foods due to COVID-19 variables.
Brands are also expected to dispose of large inventories through online clearance sales as offline sales have been sluggish due to COVID-19 this year. Polo Ralph Lauren took the early lead in Black Friday excitement by offering a 40% discount on purchases over $125 from November 25 to 27 on its official U.S. online website. Signature products such as cable knitwear, short-sleeve polo shirts, padded products, and hats ranked high among bestsellers. Traditional brand Tommy Hilfiger offers 20-40% discounts, and sports brand Adidas sells at 30-50% off. Coffee machine specialist Nespresso offers a 'Vertuo' machine as a gift when purchasing over 300 coffee capsules.
Domestic Distribution Industry Offers Over 90% Discounts to Retain Consumers
To divert consumer interest from overseas direct purchases, domestic distributors launched marketing events featuring dramatic discount benefits. This is to sustain the consumption stimulus effect that started during the Chuseok holiday in September through the end of the year. Lotte ON is holding the 'Lotte ON Black Friday' event until the 27th. Sales in the early period of the event from the 23rd to 25th increased by 52.5% compared to the previous week. Electronics such as gaming PCs, pressure cookers, and kimchi refrigerators were popular, with sales jumping 53.6%, clothing sales rose 61.7%, and luxury goods doubled. SSG.com is also holding the 'SSG Black Shopping Festa' until the 29th, offering up to 9% early bird coupons for six items and Black Price hot deals with discounts up to 81% on food, daily necessities, and electronics. During the first sales period (November 16-22), which has ended, beauty sales increased by 40% year-on-year, and underwear and fashion accessories grew by 53%. 11st is running overlapping Black Friday discount coupons of 15% and 10%, along with one-day black deals. The 'Samsung Galaxy Buds Live,' normally priced at 158,800 won, sold out at a coupon price of 142,920 won.
The fashion industry also launched Black Friday marketing through their own malls. The Handsome.com, operated by Hansome under Hyundai Department Store Group, offers up to 250,000 won in benefits depending on purchase amount and holds a lucky box raffle for 300 people. SI Village, operated by Shinsegae International, offers a Black Week special with a 10% discount coupon for purchases over 100,000 won until the 30th. Online fashion select shop Musinsa recorded cumulative sales of about 15.7 billion won as of 8 a.m. on the 27th since the 26th. Online fashion select shop W Concept is holding the 'Black Is New Concept' event until the 30th, offering benefits such as prize roulette and payback. They also run daily black deals, including offering a Lady Dior bag priced at 6.2 million won for 10,000 won. Fashion funding curation platform Hago offers up to 69% discounts on fashion and up to 90% on lifestyle products.
However, as the barrier to overseas direct purchase lowers, conflicts and disputes have increased, requiring consumer caution. The number of consultations related to overseas purchase, delivery agency, and overseas direct purchase received by the Korea Consumer Agency increased annually from 8,681 cases in 2017, 11,194 in 2018, to 13,463 in 2019. The Consumer Agency pointed out, "As the number of overseas direct purchase businesses on domestic open markets increases, consumer caution is necessary," and advised, "Buyers should carefully check all matters including customs duties, international shipping fees, overseas return fees, and delivery services before purchasing."
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