A person shops for dairy products at a supermarket in Seoul on June 30.YONHAP
The rapid growth of online shopping is continuing as regulations focus more on large supermarkets, with a recent study calling for leveling the playing field between online and offline retailers.
Online revenue accounted for 60 percent of Korea's retail market in March, according to a Korea Development Institute report on Tuesday. The figure highlights how online retailers such as Coupang have become dominant forces in the retail market.
The online retail market reached 97.7 trillion won ($63 billion) in 2024, more than double its 2018 level of 48.05 trillion won.
Revenue from the overall retail market rose 8.2 percent in 2024 from a year earlier. However, when looking at the numbers more closely, the data revealed that offline retail revenue rose just 2 percent while online retail revenue jumped 15 percent during the same period.
The report argued that the rapid expansion of online retail has had its greatest impact not on traditional markets but on large supermarkets.
When online spending per consumer increased by 1 percent, sales at large discount stores fell by 0.26 percent, based on an analysis of Shinhan Card payment data between January 2020 and December 2024. The study measured online spending using payment data from 16 online platforms including Gmarket and 11st, but excluding Naver Store.
For three types of markets, though, the growth has been slightly positive. At "super supermarkets" — those larger than neighborhood stores but smaller than large supermarkets and hypermarkets — as well as at convenience stores and specialty retailers such as butcher shops, business grew alongside growth in online sales. When online spending per consumer increased by 1 percent, sales at the three stores rose by 0.22 percent, 0.32 percent and 0.36 percent, respectively.
The report said that convenience stores have created demand distinct from online retailers by taking advantage of their physical proximity to consumers. The number of convenience stores nationwide increased by about 27.6 percent between January 2020 and December 2024.
A worker processes a credit card payment at a restaurant in Jung District, central Seoul, on June 29, 2021.NEWS1
The expansion of same-day delivery services, led by Coupang's Rocket Delivery, has also added pressure to offline retailers.
In regions where Rocket Delivery was available, a 1 percent increase in online spending led to an additional 0.01 percent decline in the number of offline purchases per consumer. There was also a 0.02 percent decrease in the number of consumers per offline retailer.
"It is difficult to conclude at this stage that Rocket Delivery has had a major impact on the retail market as a whole," said Lee Gong, a research fellow at the Korea Development Institute. "However, if delivery systems continue to advance, their impact on the sales and structure of the offline retail market could become more significant."
Lee questioned whether regulations targeting large supermarkets remain effective in protecting traditional markets now that the online retail market has grown so rapidly. Under current rules, large discount stores must close on the second and fourth Sundays of each month and cannot operate between midnight and 10 a.m., preventing them from offering early-morning delivery services.
"It is questionable how effective regulating hypermarkets is in protecting traditional markets under the current circumstances," Lee said. "The current Distribution Industry Development Act, which is centered on regulating offline retail, should be revised to eliminate regulatory imbalances between online and offline retailers."
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
