Global e-commerce giant Amazon lands in the Korean market this year, signaling a significant change in the local social commerce market.
In particular, Amazon’s one-click payment and systematic transport logistics systems are expected to threaten Korean firms. At present, local online distribution companies have to adopt payment systems more complex than the one-click payment, and the possibility of reverse discrimination is on the rise, too.
Amazon established its local subsidiary here in May last year by the name of Amazon Corporate Services Korea and has laid the groundwork for its business in Korea. For example, it has launched AWS, or Amazon Web Services, and partnered with Samsung Electronics, Nexon and many more. AWS is a cloud computing service for corporate clients.
The social commerce market in Korea was formed in 2010 and has grown explosively to reach 3 trillion won (US$2.8 billion) in size in just three years. The electronic payment market has grown rapidly as well. For instance, e-payment service provider KG Inicis has recently announced that the transaction amount based on its e-payment services exceeded 845 billion won (US$798 million) in December 2013 alone, to set a new high.
Under the circumstances, Amazon’s presence in the Korean market can be a threat to Korean social commerce firms. “These days, the local social commerce market is in the face of ever-intensifying competition,” said an industry insider, adding, “If Amazon penetrates the market through an aggressive investment in various fields such as logistics, delivery and payment, Korean firms cannot avoid a blow.”
They are especially threatened by the one-click payment system of Amazon. With it, customers have only to click once with their mouse to submit their credit card and address information and have their products delivered to the door.
Local Internet users are welcoming the news. “I hope Amazon will start its business Korea as soon as possible so that I can purchase products without the accredited certificate, Internet Explorer, Active X and mobile phone-based identification,” said one of them.
In the meantime, Democratic Party lawmakers Lee Jong-geol and Choi Jae-cheon tabled revisions to the Electronic Financial Transaction Act and the Digital Signature Act in May 2013 in order to address the complexity. The bills are currently pending in the Legislation and Judiciary Committee and are planned to be discussed during the provisional session of the National Assembly in February.