When ecommerce businesses make sales to customers in countries outside of Japan it is known as cross-border ecommerce. In Japan, cross-border ecommerce is gaining traction as a popular way for businesses to expand into new markets.

South Korea is a market with great potential for cross-border ecommerce businesses in Japan. The two countries are located very close to one another and Japan’s culture, including its food, music, television, anime, and manga, has grown popular in South Korea.

In this article, we’ll go over the basics of cross-border ecommerce in South Korea, including what businesses in Japan need to know. We’ll also discuss the main payment methods used in South Korea, as well as interesting trends in the country’s ecommerce market.

What’s in this article?

• Ecommerce in South Korea
  
• How can cross-border ecommerce businesses expand into South Korea?
  
• Which payment methods should you use for cross-border ecommerce in South Korea?
  
• What to know about cross-border ecommerce in South Korea
  
• Ecommerce trends in South Korea
  
• Key characteristics of South Korea’s ecommerce market
  

Ecommerce in South Korea

Let’s take a look at ecommerce in South Korea, drawing on data from the Japan External Trade Organization (JETRO), the Ministry of Internal Affairs and Communications, and the Ministry of Economy, Trade, and Industry.

How does ecommerce in South Korea differ from Japan?

South Korea has about half the population of Japan. However, its ecommerce market share is significantly higher, ranking fourth globally, just behind China, the United Kingdom, and Indonesia. The growth of South Korea’s ecommerce market is closely tied to its increasing adoption of cashless payments.

As we’ll explore in more detail later, the country’s search engine market is dominated by Naver, an internet service provider so ingrained in daily life that it’s been widely deemed South Korea’s national search engine. In addition, KakaoTalk serves as a core communication platform, much like LINE does for users in Japan. The country’s internet infrastructure is largely built around domestic businesses, resulting in a uniquely localized digital environment.

The features of ecommerce in South Korea

Let’s go over some of the most notable features and characteristics of ecommerce in South Korea.

Live commerce is a popular sales tool

Live commerce is gaining popularity in South Korea’s ecommerce market. Live commerce refers to a sales method in which streaming videos are used to advertise products to customers in real time. Customers in South Korea tend to rely on reviews and word of mouth when purchasing new products. In live commerce, influencers showcase the quality and feel of a product on a live video stream, allowing customers to get a feel for the product. This is otherwise impossible to do via the more static content on traditional ecommerce sites. These videos are a valuable tool for customers in deciding whether or not to make a purchase.

Live commerce is often used to promote products that customers can’t actually try on. For example, customers can’t tell how cosmetics will look on their skin, how effective they will be, or how they will smell. Live commerce is also popular for products such as clothing and accessories, because customers can’t tell how they’ll feel, fit, or look on their bodies. Live commerce videos feature not only influencers such as celebrities, but sometimes the people who run the ecommerce site as well.

Rewards point systems and coupon distribution are very popular

Competition among ecommerce businesses in South Korea is fierce. Businesses use various marketing strategies to attract customers. In particular, unique sales events and rewards point systems exclusive to a particular business can generate a significant degree of excitement among customers. Limited-time coupons also tend to increase interest in a particular site.

There are large, general ecommerce malls and highly specialized ecommerce sites

In South Korea, there are two main types of ecommerce sites: large ecommerce malls and smaller ecommerce sites that specialize in particular products. Just like Japan’s Rakuten Ichiba, South Korea’s large ecommerce malls carry a wide variety of products, including cosmetics, clothing, food, daily necessities, home appliances, and furniture.

On the other hand, smaller, more niche ecommerce sites tend to sell products with a clearly defined purpose. These sites are highly specialized and target a specific customer base. For example, a fashion-focused ecommerce site will sell products in specific categories, such as women’s apparel, secondhand clothing, or fitness equipment.

These specialized ecommerce sites are often run by relatively small businesses or individuals, but a key feature of ecommerce in South Korea is the fact that even though these sites can be small or run by a single person, they can still be known to many people. Ecommerce sites that specialize in a single category also have the advantage of being able to attract and retain a particular type of fan or customer.

Major ecommerce malls in South Korea

Let’s look at the major ecommerce malls in South Korea—note that none of these supports the Japanese language, so businesses in Japan looking to use them will need to localize their content accordingly.

Coupang

Coupang is South Korea’s largest ecommerce mall and is often referred to as the Amazon of South Korea. Coupang has a wide range of product categories, including fashion, beauty, and food. The business’s Rocket Delivery express shipping service offers next-day delivery and is popular with many customers.

Coupang also offers a cross-border ecommerce service called Rocket Overseas for customers who are from South Korea but are living outside of the country. As a subset of this service, Coupang’s Japan Store sells a variety of products from Japan, such as health and beauty products, to customers from South Korea. Coupang purchases products from businesses in Japan, but ships them from its own warehouses once orders are received. Note that Coupang discontinued its shipping service from South Korea to Japan in 2023, so customers living in Japan can no longer purchase products on Coupang.

GMarket

GMarket is one of the largest ecommerce malls in South Korea. Unlike Coupang, customers in Japan can order products, easily obtaining products from South Korea that are not available in Japan. The site has features such as reward points that can be used for future purchases and a full review function, so customers can enjoy a shopping experience that feels quite similar to using Rakuten Ichiba.

11Street

11Street is another major ecommerce platform in South Korea, offering a wide range of products similar to Coupang. The site supports international shipping, including to Japan, and allows customers to select their preferred currencies when placing orders.

TMON

TMON is another leading ecommerce platform in South Korea. Like other major online malls, it offers a wide selection of products, including food and fashion, as well as a broad range of experiential services, including travel and leisure. One of TMON’s standout features is its frequent limited-time events, such as free shipping on Fridays or flash sales tied to specific time slots. However, TMON does not provide international shipping—including to Japan—so its services are exclusively targeted to customers within South Korea.

How can cross-border ecommerce businesses expand into South Korea?

While there are a variety of ways to get started with cross-border ecommerce, let’s look at the key strategies that businesses in Japan need to know if they want to pursue cross-border ecommerce specifically in South Korea.

Creating an in-house ecommerce site and launching in South Korea

With this strategy, a business sets up and utilizes its own ecommerce site. The function and design of the site can be fully customized, making it easy to fit the business’s unique brand and style. When building an ecommerce site, an ecommerce platform—such as an application service provider (ASP)—can be used as the underlying infrastructure system, or the site can be custom-built from scratch.

Keep in mind that building an ecommerce site usually takes a long time and costs a significant amount of money. For this reason, business owners need to be very careful about cash flow and keep an eye on cost effectiveness, and there needs to be a solid system in place that promotes collaboration between in-house development teams and any external partner businesses.

Additionally, for cross-border ecommerce targeting customers in South Korea, it’s crucial to build a website that fully supports the Korean language. This means that businesses need to hire staff who are fluent in Korean, and get advice from experts who are familiar with South Korea’s ecommerce market.

Creating a storefront on an ecommerce site in South Korea

Opening a store using an ecommerce site that is based in South Korea is another option for cross-border ecommerce. As previously stated, South Korea’s market has both specialized ecommerce sites and more general ecommerce malls—businesses can sell in either or both places. The advantage of using an existing ecommerce mall is that it already has a certain level of customer awareness, so it might be relatively easy to attract customers. However, businesses must be sure to check with each ecommerce mall in advance for details on the fees and other costs associated with opening a storefront, as well as the terms and requirements for launching a store.

If a business doesn’t want to use an EC mall to sell its products, it can open a more specialized site to reach its target demographic.

Which payment methods should you use for cross-border ecommerce in South Korea?

When selling products to customers in South Korea, it’s important to use the payment methods that are most widely used in the country.

With South Korea’s advanced internet infrastructure and cashless transactions becoming quite common, credit card and mobile payments are the norm. The government of South Korea also supports the digitization of payments, so many people predict that cashless payments will become even more widespread in the near future.

The main payment methods used in South Korea’s ecommerce market are:

• Visa and Mastercard
  
• KakaoPay
  
• Naver Pay
  
• Samsung Pay
  
• PAYCO
  
• Toss
  

As you can see, there are a number of payment methods used in ecommerce in South Korea. For a business from Japan pursuing cross-border ecommerce in South Korea, it’s important to be able to accommodate as many of these payment methods as possible.

What to know about cross-border ecommerce in South Korea

Now, let’s look at the key points to consider when selling products to customers in South Korea via cross-border ecommerce.

The main search engine is Naver

In Japan, the most commonly used search engines are Google and Yahoo! JAPAN. In South Korea, on the other hand, the search engine landscape is dominated by Naver. Because Naver’s search algorithm differs significantly from Google’s, search engine optimization (SEO) strategies that are effective with Google might have little to no impact on Naver. As a result, marketing strategies targeting South Korea’s ecommerce market must be specifically tailored to Naver.

For instance, if your brand maintains a blog, publishing content through Naver Blog can improve your chances of ranking higher in search results, in turn boosting your site’s SEO performance. Additionally, since listing ads perform well on Naver, it’s important to pay close attention to elements like the page title and opening sentence of your content.

Corporate status in South Korea might be required

In many cases, having the status of a corporation in South Korea is mandatory to set up an ecommerce site or open a storefront in an ecommerce mall. Because the documentation and procedures to obtain corporate status must be done in Korean, it’s a good idea to look into working with an agency to simplify the process. Additionally, after acquiring corporate status, there’s a possibility that you’ll incur taxes based on your earnings, so consider consulting with a specialist for details regarding tax payments.

In some cases, corporate status is not required for ecommerce malls, so be sure to check the terms and conditions carefully before opening a storefront.

Some items can’t be sold through cross-border ecommerce

When selling products through cross-border ecommerce, you must first check whether those products can be exported into the target country. For example, importing alcoholic beverages via cross-border ecommerce is not allowed in South Korea; all alcoholic beverages, whether they are imported or locally produced, must be sold through a wholesaler. Thus, it’s not possible to sell alcohol directly to customers through cross-border ecommerce.

This is also true for the large, domestically focused ecommerce malls in South Korea. Even Gmarket cannot sell domestically produced soju or makgeolli.

Therefore, businesses must check in advance what items can and cannot be sold through cross-border ecommerce.

Ecommerce trends in South Korea

The proliferation of ecommerce sites has had a major impact on the daily shopping activities of customers in South Korea. Let’s take a look at two of the latest trends in ecommerce in the country.

Various initiatives targeting “Generation MZ”

In South Korea, many ecommerce operators use sales strategies targeting so-called “Generation MZ,” a group that combines Millennials and Gen Z customers. For the digital-native Generation MZ, online shopping and the use of social networking services are an essential part of daily life. And an important factor in operating an ecommerce site in South Korea is providing an experience that meets the needs of Generation MZ.

For example, live commerce is a selling approach that is centered on Generation MZ. Using the online-merge-offline (OMO) strategy to provide customers with a pleasant shopping experience is also an important way to reach Generation MZ in the ecommerce world. The OMO strategy is also a major trend in China’s cross-border ecommerce market.

Kakao Gift, an online gift service offered by South Korea’s major chat app KakaoTalk, is popular among members of Generation MZ. This service allows users to easily send e-gift certificates and other items to family and friends via chat. It is widely used in South Korea as both a communication tool and an ecommerce linking service.

Expansion of Korea’s fashion and K-beauty overseas

In recent years, Korea’s fashion and beauty products have attracted attention beyond the country’s borders. In particular, cosmetics from Korea (commonly called “K-beauty”) are extremely popular around the world, and various K-beauty products are sold in Japan through cross-border ecommerce.

The great advantage of Korea’s cosmetics and beauty products is that they are sold at reasonable prices despite their high quality. This excellent price-performance ratio is one of the reasons why K-beauty products are so popular with customers. Many newly established K-beauty brand businesses are also looking to expand into overseas markets, which will have an impact on the overall cross-border ecommerce market.

Key characteristics of South Korea’s ecommerce market

In this article, we discussed what you need to know to launch cross-border ecommerce operations in South Korea—such as the size of the market, its features and characteristics, and a wide range of other points for consideration. Because it is so close to Japan geographically, South Korea has great potential as a destination for cross-border ecommerce. The country is also home to many prospective customers who are interested in brands and products from Japan. In fact, a recent rise in Japan’s inbound tourism is due in part to travelers from South Korea.

To enter the cross-border ecommerce market in South Korea, you must have a firm understanding of the ecommerce landscape there. It’s important to accurately grasp the needs of potential customers, particularly Generation MZ. Providing payment methods that are commonly used in South Korea is key for successful cross-border ecommerce in this market. In particular, businesses need to support a variety of cashless payment options, including credit cards.

Stripe offers a wide range of functions to support the efficient operation of payment services, including acceptance of cashless payments—such as credit cards—information processing, and revenue management. Stripe Checkout supports more than 30 languages and more than 135 currencies. Checkout can also be used to optimize and simplify the payment pages of cross-border ecommerce sites. This makes it possible to provide customers with a smooth and pleasant payment experience, which can potentially lead to an increase in a business’s purchase completion rate.