Amazon Korea could crash, say experts

As Amazon Korea gears up, analysts are tipping it will take the same path as Wal-Mart in South Korea: failure and withdrawal.

It is expected it will not have a big impact on the retail industry, reports Business Korea.

Amazon Korea has hired dozens of full-time employees, including marketing, sales, and e-commerce technical and service support roles. It has also met with a Korean financial company to discuss electronic payments.

Speculation Amazon.com would launch in the Korean market has steadily raised over the past four to five years, but nothing official has come from the global e-commerce giant, says the business portal. In the late 1990s, it formed a fruitless strategic partnership with a large Korean company to tap into the market, and in the late 2000s was looking for a Korean alliance.

For Korean consumers currently buying goods at Amazon.com, purchases are shipped from a European or US distribution center.

Amazon launched its Prime Now delivery service in Singapore last week after setting up a logistics centre there. Using Singapore as a bridgehead, Amazon now has only Australia, India and Korea as target markets in Asia Pacific. It has already shown rapid growth in Japan, but has failed to gain traction in China.

In Japan, Amazon had annual double-digit sales growth to become the country’s top e-commerce company. Amazon Japan posted ¥1.174 trillion (US$10.6 billion) in sales in its latest fiscal year, up 17.5 per cent from the previous year.

In China, Amazon took over a local e-commerce company in 2004 and started a shopping mall service, but lost out to Chinese companies like Alibaba. Amazon’s share in China is less than 1 per cent.

In Korea, local e-commerce and internet businesses are dominant. E-commerce companies such as 11th Street, Coupang, G Market, Interpark, Ticket Monster and WeMakePrice offer fast and cheap shipping services.

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