"Direct Purchase Volume Quadrupled Over 10 Years... Reverse Direct Purchase Experiences Fluctuations"

KCCI Publishes '2024 Distribution and Logistics Statistics'
Direct Purchase Transactions Increase from 1.6 Trillion to 6.7 Trillion KRW Over 10 Years
Reverse Purchase Fluctuates Due to Sharp Decline in Cosmetics to China

Over the past decade, the scale of overseas direct purchases has grown 4.1 times, but reverse direct purchases (exports) increased until 2019 and have recently experienced a decline. As sales of cosmetics to China decreased, the Korean reverse direct purchase market also contracted. There are calls for the government to provide policy support such as logistics and marketing to increase the entry of small and medium-sized enterprises into platforms.

According to the '2024 Distribution and Logistics Statistical Yearbook' published by the Korea Chamber of Commerce and Industry (KCCI) on the 26th, the scale of online overseas direct purchases grew from 1.6 trillion won in 2014 to 6.7 trillion won last year, a 4.1-fold increase. Overseas reverse direct purchases increased from 700 billion won in 2014 to 6 trillion won in 2019 but decreased to 1.7 trillion won last year. A KCCI official said, "The direct purchase market made a 'quantum jump' by rapidly growing centered on clothing and fashion accessories, but reverse direct purchases saw a slowdown in growth due to the increase in 'K-Beauty' related product sales being curbed by the Chinese ban on Korean products (Hanhanryeong)."

Lee Dong-il, president of the Korea Distribution Association, said, "Until 2021, domestic consumers mainly used American shopping malls such as Amazon and Best Buy, with the US having the largest share in direct purchases. However, since last year, when C-commerce platforms like AliExpress and Temu officially entered the domestic market, the share of China has increased, leading to greater growth in direct purchases."

Reverse direct purchases have experienced fluctuations due to a decline in cosmetics sales to China. Cosmetics account for about 80-90% of the reverse direct purchase items in China. The scale of cosmetics reverse direct purchases peaked at 4.9 trillion won in 2020 and has sharply declined since, failing to recover. The overall reverse direct purchase trend in China showed a similar pattern.

Professor Ma Jong-su of the Korea Distribution Training Institute said, "China has the largest share in overall reverse direct purchases, and cosmetics have played the biggest role in growth among product categories. However, since the Hanhanryeong (Korean product ban) in 2017, when the Chinese government restricted the purchase of Korean cosmetics, food, and content, the Chinese cosmetics reverse direct purchase market took a direct hit."

Over the past decade, clothing and fashion have consistently ranked first in direct purchase items. The second place was food and beverages. The ranking of items has not changed significantly, only the transaction scale has expanded. In reverse direct purchases, cosmetics ranked first and clothing and fashion second. With the spread of 'K-Culture,' the transaction scale of beauty, clothing, and cultural items including music and videos has grown.

A KCCI official said, "Reverse direct purchases through platforms have very high future growth potential, but actual growth has been insufficient. To increase the entry of competitive items in K-content, K-beauty, and K-food sectors as well as small and medium enterprises and small business owners into platforms, it is necessary to expand comprehensive government support including logistics and marketing."

Jang Geun-mu, director of the KCCI Distribution and Logistics Promotion Institute, emphasized, "As polarization between online and offline retail markets intensifies and the price competitiveness of Korean products weakens compared to China, it is time to prepare policies to strengthen competitiveness in the distribution sector. The public and private sectors must work together to devise measures to revitalize reverse direct purchases."

KCCI publishes the statistical yearbook annually. It comprehensively organizes statistics announced by companies and the government, including market size, trend indicators in distribution and logistics, and overseas statistics. It is available for free on the KCCI website.