E-commerce stores in Seoul have plummeted by a staggering 35.9% over the last three years, pushing small-scale online sellers into a full-blown survival crisis. Even as the online shopping market has grown to an unprecedented ₩272 trillion (Korean Won) in transaction value, closures among smaller sellers are accelerating at an alarming rate.
Decrease in 3 Years (Seoul E-commerce Stores) 35.9%
Online Shopping Transaction Value (Record High) ₩272조
According to a report by Hankyung (Hankyung), one in three online shopping mall owners are choosing to close their businesses and seek employment because they can't even earn the minimum wage. This situation is attributed to a combination of factors: the aggressive push from ultra-low-cost overseas platforms like AliExpress and Temu, coupled with excessive platform fees and advertising costs.
https://www.hankyung.com/article/202609055770iImplications for K-Beauty Businesses
- K-Beauty OEM/ODM: The increasing closures of small online brands could lead to a decrease in new orders. To secure stable revenue, strengthening partnerships with large K-Beauty brands and global distribution channels is essential.
- K-Beauty Brands: In the face of intensifying ultra-low-price competition, survival is challenging without strong brand IP (Intellectual Property) and exclusive product capabilities. Redefining unique value propositions and differentiated marketing strategies is urgently needed.
OEM/ODM companies must enhance their differentiated formulation technologies and customized small-batch production systems to support the competitiveness of niche market brands. Simultaneously, they should expand cooperation with brands entering large distribution channels to diversify risks.
