What you don’t know (yet) about the success of Korean e-commerce?
Why is e-commerce more successful in South Korea (compared to Belgium)?
Yes, that is the question I hear quite often when I present the results of BeCommerce Market Monitor, a study - commissioned by BeCommerce - where we capture the growth of e-commerce in Belgium every quarter since 2015. In fact, I see lot of businesses that are keen to figure out the very secret of the e-commerce boom in Korea (compared to 2015, Korean e-commerce has grown 247% in 2021 according to statista) and wish to implement it in the Belgian market. As a person who grew up in Korea but has built up a professional life in Belgium as a market researcher specialized in e-commerce, I would like to share some thoughts on this matter, inspired by my personal experience as well as based on some statistics from the GfK Consumer Life and other scientific studies.
Culture shapes how consumers make decisions.
To understand why consumers in both countries behave differently, we first need to take a look at how they make decisions for future actions. A preceding scientific study (Markus & Kitayama, 2003) suggested that people from Asian contexts might make decisions differently compared to people from European contexts; Those who are from European contexts focus on one’s own needs when making decisions. For them, what is happening in their environment plays a less important role than their own needs. Hence, when they are making shopping choices, they focus mostly on what they want and not so much on what others think. In contrast, for those who are from Asian contexts, the contexts they are in have a bigger influence on how they will behave, as they understand their own needs in relation to their environment. Our data from GfK Consumer Life also supports this finding; 47% of Belgian consumers said that they do not feel constrained by social expectations or age- and gender-related prejudices while this percentage goes down to 38% for Korean consumers. This lower number for Korean consumers again highlights that other consumers’ opinions are a fundamentally more important factor when making decisions in Korean contexts. More specifically, when Korean consumers shop, they are more likely to consider what other shoppers think about products or what other products different shoppers are buying. For instance, GfK Consumer Life study shows that 41% of Korean Consumers indicated that online reviews from other shoppers are in the top 5 of factors influencing their shopping decisions. For Belgian consumers, this was the case for only for 27%. In fact, from our gfknewron Consumer study, we see that Korean consumers like to take more time researching before their purchase compared to Belgian consumers. This is probably because Korean consumers like to avoid missing out on any crucial information of the environment in order to make the right decision.
Fear of Missing Out (FOMO) and Love for Technology: the match made in heaven for e-commerce?
So, we could say that Korean consumers have higher levels of fear of missing out when it comes to shopping information. But why does this matter to e-commerce? Well, when their FOMO meets their love for technology, we have so-called ‘match made in heaven’ for e-commerce. Let me explain it; According to GfK Consumer Life data, Korean consumers are more open to technology than Belgian consumers, especially to the technology that makes their life easier. For example, half of Korean consumers liked the idea of technology that ‘knows’ them and can make recommendations and take action based on their wants and needs. For Belgian consumers, this was only 22%. Considering all the efforts they need to go through to make the right decision, this statistic might not come as a surprise. In order words, they like to make use of technology – which is often online – to make their purchase decision easier. This gives a boost to general shopping websites and comparison websites, with 2 in 5 Korean consumers picking them as a key shopping influencing factor. Therefore, we could conclude that Korean’s openness to technology and FOMO have been fuelling the growth of e-commerce.
What does this mean to Belgian e-commerce players, anyway?
Enough about Korean consumers. Let’s talk about how this insight matters to Belgian e-commerce players. Through this article, I wanted to convey the message that without a deep understanding what consumers are made out of, it is not possible to understand why exactly they behave in certain ways. This also means that without understanding Belgian consumers, just copy-pasting innovations from South Korea might not be the answer to succeed in the Belgian (e-commerce) market. A success in your business, whether that is online or offline, starts from understanding consumers and how your product/service fits with them. In the next article, I will talk more about what makes Belgian consumers buy online and how you can convince them in your e-commerce business. Stay tuned for these insights!