Korea - Direct MarketingKorea - Direct Marketing
Direct selling is the most important retailing channel in Korea as e-commerce via internet and mobile devices have become the biggest sales channel in Korea in 2016. For more information on Internet and mobile commerce, please read the Electronic Commerce section of this chapter. Besides e-commerce, door-to-door sales and multi-level marketing remain competitive in Korea.
Door-to-door sales and multi-level marketing are other important direct sales channels. According to the Korea Direct Selling Association (KDSA: http://www.kdsa.or.kr), door-to-door sales and multi-level marketing sales reached approximately $12.6 billion in 2016, up from $12.5 billion in 2015. According to the World Federation of Direct Selling Association (WFDSA: https://wfdsa.org), the most common products sold through direct selling in Korea in 2017 are: wellness products (45 percent), cosmetics and personal care products (26 percent), and household goods and durable products (11 percent).
Consumer Sales in Korea via Direct Selling (2017)
Source: World Federation of Direct Selling Association (WFDSA), 2018
https://wfdsa.org/wp-content/uploads/2018/06/Product-Report-2017-June-6-2018-v2-002.pdf
Door-to-Door Sales
Door-to-door sales remained stable at around $7.9 billion from 2015 to 2016. According to the Korea Direct Selling Association (KDSA: http://www.kdsa.or.kr), the number of companies registered as a door-to-door sales company decreased from 25,161 in 2015 to 23,475 in 2016 due to ‘market restructuring’ and the growth of e-commerce. This stagnation or even decreasing trend could remain in the future as a by-product of the growth in e-commerce.
Multi-Level Marketing (MLM)
Korea’s multi-level marketing sales for 2017 approached $4.5 billion up from $4.4 billion in 2016. The number of registered multi-level marketing companies in Korea has increased to 125 from 124 in 2016. It is reported that these companies employ over 8 million sellers/distributors.
The Korean government reduced the restrictions on MLM companies by passing legislation eliminating most existing market barriers against MLM products, such as the obligation to disclose retail prices on MLM product labels. Oversight of the MLM industry is the responsibility of the Korea Fair Trade Commission (KFTC).
Consumer Sales in Korea via Multi-Level Marketing ($ billions)
Source: Korean Fair Trade Commission (FTC), 2017
MLM activity for U.S. products is concentrated in the cosmetics, cleaning products, health and wellness, and kitchenware industries – and has been expanding. MLM companies should promote their products and services appropriately and efficiently by carefully analyzing Korean market trends and sophisticated and mature Korean consumers. Accurate knowledge of the Korean retail and consumer market can prevent unnecessary conflicts with government agencies, consumer ‘watchdog’ groups, or industry groups. There are numerous consumers, business and industry associations, governmental groups, and think-tanks which regularly collect valuable information on consumers and consumer trends.
Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.
Door-to-door sales and multi-level marketing are other important direct sales channels. According to the Korea Direct Selling Association (KDSA: http://www.kdsa.or.kr), door-to-door sales and multi-level marketing sales reached approximately $12.6 billion in 2016, up from $12.5 billion in 2015. According to the World Federation of Direct Selling Association (WFDSA: https://wfdsa.org), the most common products sold through direct selling in Korea in 2017 are: wellness products (45 percent), cosmetics and personal care products (26 percent), and household goods and durable products (11 percent).
Consumer Sales in Korea via Direct Selling (2017)
Source: World Federation of Direct Selling Association (WFDSA), 2018
https://wfdsa.org/wp-content/uploads/2018/06/Product-Report-2017-June-6-2018-v2-002.pdf
Door-to-Door Sales
Door-to-door sales remained stable at around $7.9 billion from 2015 to 2016. According to the Korea Direct Selling Association (KDSA: http://www.kdsa.or.kr), the number of companies registered as a door-to-door sales company decreased from 25,161 in 2015 to 23,475 in 2016 due to ‘market restructuring’ and the growth of e-commerce. This stagnation or even decreasing trend could remain in the future as a by-product of the growth in e-commerce.
Multi-Level Marketing (MLM)
Korea’s multi-level marketing sales for 2017 approached $4.5 billion up from $4.4 billion in 2016. The number of registered multi-level marketing companies in Korea has increased to 125 from 124 in 2016. It is reported that these companies employ over 8 million sellers/distributors.
The Korean government reduced the restrictions on MLM companies by passing legislation eliminating most existing market barriers against MLM products, such as the obligation to disclose retail prices on MLM product labels. Oversight of the MLM industry is the responsibility of the Korea Fair Trade Commission (KFTC).
Consumer Sales in Korea via Multi-Level Marketing ($ billions)
Source: Korean Fair Trade Commission (FTC), 2017
MLM activity for U.S. products is concentrated in the cosmetics, cleaning products, health and wellness, and kitchenware industries – and has been expanding. MLM companies should promote their products and services appropriately and efficiently by carefully analyzing Korean market trends and sophisticated and mature Korean consumers. Accurate knowledge of the Korean retail and consumer market can prevent unnecessary conflicts with government agencies, consumer ‘watchdog’ groups, or industry groups. There are numerous consumers, business and industry associations, governmental groups, and think-tanks which regularly collect valuable information on consumers and consumer trends.
Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.