ajunews Thursday,29 February 2024

South Korea's online luxury goods market shrinks due to inflation and change in consumer trends

By Park Sae-jin Posted : March 22, 2023, 17:37 Updated : March 22, 2023, 17:37

[Gettyimages Bank]

SEOUL -- South Korea's online luxury goods market which thrived during the COVID-19 pandemic has shrunk after the country took steps such as lifting regulations on compulsory face masks at public places to normalize people's lives through the so-called "reopening" process.
 
South Korea's online luxury goods market mainly comprised of online commerce platforms and secondhand luxury goods trading services hit its prime in March 2022. The number of monthly active users of the top four luxury goods trading platforms -- Ballan, Must'it, OKmall, and Trenbe -- in January 2023 was 8.6 million, down 33 percent from the same period a year ago, according to Wiseapp, a smartphone app user analyst firm.
 
Online luxury goods shopping platforms garnered popularity during the pandemic thanks to revenge spending by consumers. Travelers who regularly visit overseas countries for vacations relieved their frustration of being grounded through excessive spending. Online shopping malls provided easy access for customers who do not wish to visit luxury goods stores at department stores and other offline shopping malls.
 
The online luxury goods market soon became a red ocean after conglomerate-owned shopping services also kick-started their own online shopping outlets. Some stores were caught up in accusations that they sold fake products. Some shopping malls adopted blockchain technology to ensure the authenticity of products while others offered 200 percent refunds if products were found to be fake items.
 
The shrinkage of the online luxury goods market also affected offline stores. According to industry officials, the average of sales increase rate of luxury goods at major department stores in January and February was about 5.5 percent, down 84 percent compared to an average sales increase rate of 34.5 percent in the same period last year.
 
According to the Korea Airports Corporation, some 373,000 people headed to overseas countries for a short vacation during the Lunar New Year holidays (January 20~24). The number of travelers increased by 1,300 percent on-year, reflecting South Korean consumers' desire to travel abroad. 

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