Domestic Consumers Increase Welfare by 540 Billion KRW Annually through Overseas Direct Purchase... Direct Purchase Prices 23.3% Cheaper

Korea Institute for Industrial Economics and Trade, Report on 'Analysis of Changes in Consumer Welfare Due to Overseas Direct Purchase'

[Asia Economy Sejong=Reporter Kwon Haeyoung] An analysis has revealed that the consumer welfare gained by domestic consumers purchasing imported goods at lower prices through overseas direct purchase (ODP) exceeds 500 billion KRW annually.

According to the report "Analysis of Changes in Consumer Welfare Due to Overseas Direct Purchase" released by the Korea Institute for Industrial Economics and Trade on the 30th, the additional consumer surplus obtained through ODP was estimated at 536.3 billion KRW in 2021. This accounts for about 10% of the ODP transaction amount (5.1152 trillion KRW) in the same year.

The proportion of ODP transaction amount within domestic retail sales (518.534 trillion KRW) was only 1%. However, it has doubled from 0.5% in 2017 over four years, expanding its role as a distribution channel. Although ODP involves longer delivery times and greater inconvenience in returns, exchanges, and refunds, it is considered advantageous because prices are lower than officially imported products and it allows purchase of products not imported domestically.

The report conducted a price survey on a total of 170 items and found that the prices of ODP products were 23.3% lower compared to officially imported products. By category, the price of health functional foods purchased via ODP was 44.2% lower than that of officially imported products. Other categories such as clothing and fashion-related products (-33.3%), home appliances (-24.7%), footwear (-23.3%), cosmetics (-23.6%), bags (-30.3%), household and automotive products (-23.4%), and children and infant products (-7.4%) also showed lower prices through ODP.

In particular, health functional foods, the top ODP category, accounted for 16.5% of the domestic market through ODP, establishing ODP as an important distribution channel.

Kim Sookkyung, Senior Research Fellow at the Service Industry Research Division of the Korea Institute for Industrial Economics and Trade, stated, "If the logistics convenience of ODP increases, it is likely that ODP will become an important distribution channel in various markets in the future," adding, "It will exert considerable competitive pressure not only on officially imported products but also on related domestic industries." She further noted, "Domestic related industries need to strengthen efforts to enhance competitiveness and expand markets through innovation," and "If ODP acts as a factor driving innovation in domestic related industries and improving competitiveness, it could have a positive impact on domestic industries in the long term as well as increase consumer welfare."