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The Rapidly Expanding Social Commerce Market of South Korea and Japan
ROA Holdings, Feb 2011, Pages: 44
In the research report titled The Rapidly Expanding Social Commerce Market of South Korea and Japan – Success Factors and Challenges for Future Growth, the latest developments of social commerce are analyzed via the advanced markets of South Korea and Japan, which have been presenting the fastest growth rate in Asia. The global market is paying a keen attention on social commerce because of its rapid development. Since the success of Groupon, social commerce has been quickly expanding into various industries, and the market size is growing fast.
This report estimates that the social commerce market will continue to expand by 2012 but restructuring after 2012 is inevitable. Rapid growth until 2012 is enabled by the expansion of smartphones, increases in SNS users, and development of related technology infrastructure.
Currently social commerce is attracting attentions in the wireless industry. It is a subset of electronic commerce but uses Social Network Service (SNS) to assist online shoppers as well as the process of selling products and services over the internet. The global market is paying a keen attention on social commerce because of its rapid development. Since the success of Groupon, social commerce has been quickly expanding into various industries, and the market size is growing fast.
There are many reasons behind the rapid growth of social commerce, but increases in smartphones and SNS users are considered as the most significant growth factors. Smartphone users have internet access anytime and anywhere they want, and promote social commerce through their friends connected via SNS, hence accelerating the development of social commerce.
It is difficult to estimate how long social commerce will maintain its growth, but restructuring is expected from 2011, after which it will be stabilized.
The social commerce market will continue to expand by 2012 but restructuring after 2012 is inevitable. Rapid growth until 2012 is enabled by the expansion of smartphones, increases in SNS users, and development of related technology infrastructure.
In terms of potential side effects in the social commerce market, drop in the quality of service is the biggest concern, since service quality dictates the future growth of social commerce. Considering that the basis of social commerce is ‘viral marketing,’ which is ‘word of mouth’ marketing based on SNS, a poor service quality will turn customers away and might lead to a market recession.
Although it is being applauded as a ‘Blue Ocean,’ in terms of market universe, social commerce has a high chance to become a ‘Red Ocean’ after going through a short restructuring. This trend will be accelerated especially if the social commerce service providers are too much dependent on the service commission as their income source in exchange for offering discount of over 50%.
This report examines the strengths and weaknesses of social commerce as well as success and failure factors. It provides an analysis on the recent developments and future prospect for the Korean and Japanese social commerce markets, which have been presenting the fastest growth rate in Asia. Primary and secondary research was conducted in collecting the information, including interviews with professionals related to social commerce business in South Korea.
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