[Korea duty-free in 2019] “Online duty-free” is the key driver of rapid growth in downtown duty-free sales

기사입력 : 2020-06-25 15:55:41 안상준 기자
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The robust growth of duty-free can be said due to the growth of online duty-free. Departure duty-free shops cannot sell online under the customs law. Only downtown shops can operate online. Korea’s online duty-free sales surged 956.5% from KRW 794.4 billion in 2014 to KRW 7,598.1 billion in 2019. In particular, the Y-O-Y growth rate of 2018 and 2019 were the highest. It was analyzed that Chinese B2B in the Korean duty-free was actively unfolding during this period, by making a direct impact especially on online duty-free. It grew 75.1% in 2019 compared to KRW 4,338.8 billion of 2018, creating a new trading pattern.

▲ Infographic = Hae Young Yuk

 

Online duty-free in downtown Korea has several characteristics : A) there is an advantage of being able to trade a myriad of products overcoming the limit of physical shop space. B) it is possible to hugely minimize the operation cost compared to offline shop. Therefore it allows to offer the big discount coupon and the very competitive price. C) it has the advantage of being able to introduce various products with dynamic events as part of the online marketing. D) it serves as a test bed for new products that cannot occupy the offline space. E) it could provide a major shopping channel for Korean nationals. 


As such, online duty-free shops can be regarded as a key driver of the increase in Korean duty-free sales. Among them, online sales of big 3 companies reached at KRW 6,684.4 billion, which accounts for 88% of the total online sales of KRW 7,598.1 billion. Practically the online duty-free can be said to be owned by those big 3 players.
 

These companies flagship stores, Lotte Myeongdong, Shilla Seoul, and Shinsegae Myeongdong have the highest online sales contributing to the overall sales growth of Korean duty-free. In the case of Lotte Duty Free, the flagship store, Lotte Myeongdong, has the sales of KRW 5,714.2 billion, while their sum of online duty free shops (Seoul: Myeongdong, World Tower, COEX, Busan, Jeju) was at KRW 3,196.9 billion, comparable up to 56% of Lotte Myeongdong sales.
 

While the total sales at the flagship store of the Shilla Duty Free in Seoul was KRW 4,262.9 billion, their online sales (Seoul: Seoul, Jeju, HDC Shilla, Hotel Shilla6 reached as much as 51.6% with KRW 2,199.6 billion. Shinsegae Myeongdong sold KRW 2,542.3billion, but their total sales in online (Myeongdong, Gangnam and Busan) was KRW 1,288 billion, measuring up to 50.7% of their Meyongdong shop sales.

 

The trend of online of Big 3 operators is that their online sales reached as much as more than half of each flagship store sales. The sales growth of online duty-free is the most distinctive features of duty-free industry of Korea driving overall sales growth.

[저작권자ⓒ (주)티알앤디에프뉴스. 무단전재-재배포 금지]

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