Home Shopping Market in Korea

The Korean home shopping industry has grown at impressive rates in the past decade, emerging as the third largest retail outlet behind department and discount stores.

Sales from the Korean TV home shopping industry reached $544 million in 2003 and are estimated to have reached $705 million in 2005. 

Home shopping includes cable TV, Internet, and catalog sales. Internet shopping is also increasing and may have already surpassed TV home shopping in sales.  Korea is one of the leading countries in the world in terms of broadband penetration with 33 million users representing 72 percent of the total population over the age of six.  In 2003, total sales for online shopping were approximately $616 million of which $50 million were for food and beverages.  Agricultural and fishery products have a 9 percent market share and sales are increasing by an average of 6.5 percent annually.

Home shopping company employs a vendor, who conducts and researches on possible products, purchase the product, develop packaging designs, marketing and    delivery.  There are less than 20 designated vendors for the five major home shopping companies and they are more or less responsible for choosing which importers the home shopping company works with.  They examine the importer’s market share, name recognition, financial status and the potential of a new product.  As a result, it is very important to work with a reputable importer in a stable financial position.  In order to work with a home shopping company, importers are required to have large amounts of capital (products sold through home shopping companies need to be imported in advance and in large quantities) and warehouse space.  A deposit of $1 million is required to cover the risk of returned goods, which the importers have no control over.  It is uncommon for an importer to perform the role of a vendor.  However, if an importer has exclusive rights to a particular product, the home shopping company will make an exception and make a contract directly with the importer.

Nongsusan (which translates as ‘agricultural products’) is the main TV home shopping channel out of five major Home Shopping companies for food.  According to an industry analyst, total sales reached $484 million in 2005, 60 percent of which were from agricultural products.  This is double the amount of all other home shopping companies combined.  Out of the total sales of agricultural products, only five percent were imported and one percent of which was from the United States. 

The most popular agricultural products that are sold through home shopping companies seem to be those that fit into current trends, such as the “well-being trend.”  Korean consumers, much more so than American consumers, are extremely health conscious and are very interested in products that can make a health claim.