20100720

eCommerce revolution in Korea: online sales become the first distribution channel

When I first came to Korea 20 years ago, Department Stores were becoming the main distribution channel for many consumer goods, taking over traditional door-to-door sales.

Convenience stores (FamilyMart, LG25 - now GS25 -, BuyTheWay, 7Eleven...) were also gaining ground. Then came the hypermarkets (eMart, Carrefour at one moment, Samsung / Tesco HomePlus, Lotte Mart...), and the SSMs / SuperSuperMarkets (Lotte mySuper, HomePlus Express, eMart Everyday...).

One by one, small groceries / mom & pop stores closed, and traditional markets plummeted, killed by discount shopping (or supposedly "discount" shopping : a recent survey pointed out that for many food items, traditional markets are actually cheaper). Survivors could count on one system that protected both food majors and small distributors : product packaging including the price tag regardless of the sales channel, which guaranteed the same price for such basic items as instant noodles or ice creams. But this system is about to be abandoned and anyway, it didn't mean much anymore : big discount sell their own brands of instant noodles, and my local SSM offers a year-round 50% discount on all ice creams.

Even as competition raged between discount shops, many opening 24/7/365, Department Stores (Lotte DS, Shinsegae DS, Hyundai DS, Galleria DS...), sometimes growing into ambitious complexes (ie Shinsegae Centum City in Busan) remained ahead for many consumer goods and fashion.

Until now : online sales have just become Korea's first distribution channel.

This doesn't come as a surprise for anyone living in "ubiquitous" Korea : beyond pure players (ie Auction), even brick and mortar leaders are pushing ecommerce very hard, prefering cannibalization to the loss of a customer.

Somehow, we're back to square one and door-to-door sales. The first door is your mobile, PC or TV screen, but everything is done to deliver it wherever you live (home deliveries keep booming), wherever you work (Seoul would collapse without cheap express deliveries), and even wherever you go (ie location based services and mobile couponing).

Like for ADSL or FTTH, Korea's economy of access is unbeatable. Because of urban density, because major players are ready to offer what comes as a premium anywhere else, and furthermore because in many cases for smaller fish, the last mile is provided by people working under the legal hourly wage, ready to make a buck even if it doesn't make any sense if you simply take into account transportation costs. When you see a truck carrying about five hundred eggs on a highway, you know something is wrong. And when you order a book online, the delivery person is rarely twice the same plain-clothes individual.

I guess that's one of the reasons why Amazon is not in Korea. The retailer tried to do some business via Samsung / SIMS more than ten years ago but failed. So Amazon ships from other countries to international customers while Kim & Chang law firm securely protects Amazon.co.kr URL.

Of course, Amazon would face pure players in cultural goods, such as Aladdin (now Aladin.co.kr), or Kyobo Book Center (very ambitious in the ebook ecosystem), but I don't think it's about competition : players differenciating themselves on logistic platforms tend to struggle here. Carrefour left the country in spite of commercial success for regulatory reasons : it couldn't operate with its usual purchasing power model. I think the logistics equation could be very tricky for Amazon.

eBay is faring much better in Korea (as Auction.co.kr) - it even wolfed down G-market, snatching it away from Inter Park... but eBay more into auctions and C2C than into retailing and B2C. And when it advertised massively on internet shopping, big retailers pushed the pedal to the metal.

But the biggest revolution for e-commerce in Korea this year is the end of Microsoft Explorer's de facto monopoly since July 1st : since 1999, all online shopping and banking services had to use ActiveX systems, but the Financial Services Commission put an end to it following the recent boom in smartphones.

mot-bile 2010 - see also my original post on Seoul Village



20100719

3D notebooks from LG

LG is not only betting on TVs for 3D (1 million units expected this year) : 3 new laptops have just been unveiled, priced about 20% more than standard models (KRW 1.6 M to 1.9 M - USD 1,330 to 1,580 these days). Desktops and monitors were also introduced, all requiring 3D glasses to enjoy the effect.

The Korean manufacturer expects 3D to represent 30% of its laptop sales in 2011, and the segment to boom (1.1 M units in 2011, 13.5 in 2013). For the number 2 player in TV displays, 3D could prove a game changer in a market where it's struggling among second-tier manufacturers. The move is also defensive as TV and PC converge, often sharing the same screens.

Beyond movies, web enabled / 3D devices are ideal online gaming and MMORPG, key drivers in Korea : LG could leverage on the PC Bang - game editors ecosystem to accelerate adoption and stimulate content production.

mot-bile 2010



20100715

VoIP over 3G, unlimited data... SK Telecom victim of the summerheat wave ?

SK Telecom is lobbying in favor of a more open regulation for mobile Voice over IP in Korea : instead of being only legal on Wi-Fi, it would be authorized on 3G as well. SKT would then provide the service through Skype-like solutions - actually, I wouldn't be surprised to see some Google inside (see "Gizmo5 found its Google Voice"), and consumers would only pay for the data (not to mention fees from the app provider).

OK OK. There's a catch : data rates are pretty expensive in Korea.

Well, not so much now : SK Telecom also announced an unlimited data plan for all subs with a data package of over KRW 55,000 (about USD 45) per month. That would be for smartphone holders, but as far as I know, you can use your smartphone as a modem for greedier devices.

Alright. Here is a small operator struggling for market share, desperate to win big customers, and not worried about network capacity.

Wait a minute. SKT is by far the leader of Korea's (saturated) market, with about 51% of the pie. SKT does not sell iPhones like AT&T, whose success with Apple forced a spectacular backpedaling on unlimited data plans, but SKT is doing pretty well with Samsung Galaxy S (over 300,000 units sold for this Android handset in Korea). Its position doesn't seem that much threatened in the short term.

But what looks like a desperate defensive move following data rate cuts by competitors is also an aggressive move on convergence / quadplay offers (or is it pentaplay, now that the battle rages on wi-fi hotspots ?). Voice ? A commodity, sooner than later - losing a big customer altogether would cost me much more. And guess what ? Ultra-Broadband Convergence Network (UBcN) is around the corner (that's to say 2013 but blocks are bigger around here).

Still, unlimited data plans are a very risky bet in "ubiquitous Korea".


mot-bile 2010



20100708

Cisco Cius ? Put it on my Samsung Galaxy Tab

With its Android based Galaxy series, Samsung seems to have packaged a nice alternative to the iPhone / iPad duet. Or is it the whole industry that's growing tired of the Cupertino arrogance ?

Anyway, the Galaxy S is already selling very well in Korea (over 200,000 units within days) and overseas (the top 5 MNOs went for it, 100 worldwide), and NTT DoCoMo already announced the launch of Galaxy Tab in October 2010 (LG's tablet is still expected in Q4).

Meanwhile, Cisco gave a new shot at the business tablet concept : the Cisco Cius is expected H1 2011. Also based on Android, the Cius looks much smaller than the 7 Inch Galaxy Tab, and seems to focus on video calls : "HD video (720p) with Cisco TelePresence solution interoperability for lifelike video communication with the simplicity of a phone call"*... That, of course, is provided you're connected to a big pipe, say Wi-Fi for instance.

Funny how Wi-Fi coverage is getting popular again : MNOs are abandoning flat rates for data... and all hopes that LTE can support the boom in heavy mobile / nomadic usages.

Cisco also throws in EVO 4G, Bluetooth, USB, the last one a sure bet.

But I would rather bet on RIM than Cisco for a hit in business circles, even if the BlackBerry Tablet is supposed to rely on the Blackberry handset for connectivity. Actually, that major drawback for the enduser could prove an excellent argument for CIOs and CFOs.

Nevermind that geeky CEO.


mot-bile 2010

* other applications apabilities (see
Cisco Cius website) :
• 802.11a/b/g/n Wi-Fi, 3G/4G data and Bluetooth 3.0 help employees stay connected on and off-campus
• Virtual desktop client enables highly secure access to cloud-based business applications
• Android operating system, with access Android marketplace applications
• Collaboration applications including Cisco Quad, Cisco Show and Share, WebEx, Presence, and IM
Tablet Highlights:
• 7” diagonal, high-resolution color screen with contact-based touch targets delivers an elegant, intuitive experience
• HD Soundstation supports Bluetooth and USB peripherals, 10/100/1000 wired connectivity and a handset option
• Detachable and serviceable 8-hour battery for a full day of work
• Highly secure remote connections with Cisco AnyConnect Security VPN Client
• HD audio with wideband support (tablet, HD Soundstation)



20100701

Woot flows with the Amazon

In his own words*, Woot CEO Matt Rutledge announced the agreement between his hot sales website and Amazon.com. The Woot brand shall survive like today : barely Audible, but with a music of its own.

Barely Audible ? I wouldn't be surprised to see Jeff Bezos use a loudspeaker for that one on social networking sites.

mot-bile 2010


* see "
Amazon, Woot, and You: But Mostly Woot", following an email stating "BREAKING: Woot To Be Acquired By Amazon, Then Left To Amuse Ourselves - Holy crap! Woot has signed an agreement with Amazon - yes, the Amazon - to become an independent subsidiary of the ecommerce colossus. Woot HQ will remain in Carrollton, Texas, and will operate as autonomously as other Amazon companies like Zappos and Audible. Visit the blog for our usual snarky commentary and tell us what you think. - Woot" (NB at this stage, nothing about the deal on Amazon.com's corporate website)



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