COVID-19 'Shopping Refugees' Board the E-commerce Ark

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[Asia Economy Reporter Jo In-kyung] #Park Jiwon (57), who lives in Hong-eun-dong, Seoul, has not visited a large supermarket even once since the COVID-19 pandemic began last year. Instead, she uses dawn delivery services 2 to 3 times a week. From bulky and heavy items like toilet paper and bottled water to tofu, beef, and various ingredients, everything is delivered right to her doorstep. She said, "In the past, I hesitated to buy fish or meat without seeing them in person, and ordering just a few ingredients for delivery felt cumbersome. But with the situation where going out is discouraged due to COVID-19, I have used it frequently, so I can trust the freshness, and above all, I feel safe because I don't have to go outside."

#Lee Kyung-ja (65), who lives in Dongtan, Gyeonggi Province, has not been able to visit her elderly mother in a nursing hospital two hours away since COVID-19. She substitutes visits with video calls and orders snacks or necessary items from online shopping malls to be delivered directly to the hospital. Recently, for her mother's birthday, she ordered a cake from a franchise bakery near the hospital through a delivery app and sent it. Lee said, "Since visits to nursing hospitals were banned, internet shopping deliveries have been fulfilling the role of a dutiful child."

Entry of the 50s and 60s into e-commerce

The rapid growth of the e-commerce market has been driven by the 50s and 60s middle-aged and elderly generations who were not accustomed to online shopping. According to the Ministry of Science and ICT's '2020 Internet Usage Survey,' while the internet shopping usage rate increased by 5.8 percentage points across all age groups last year, the 50s age group increased by 16.1 percentage points?the highest?followed by the 40s at 14.7 percentage points and the 60s at 10.6 percentage points. Sixty percent of people in their 50s and 30% in their 60s are using internet shopping.

The distribution industry refers to this as 'shopping refugees' entering e-commerce. The term 'shopping refugees,' referring to elderly people who find it difficult to go out to buy daily necessities, first appeared in Japan 4 to 5 years ago. Now, it refers to generations who are not familiar with the internet and smartphones and mainly use offline stores.

Rapid increase triggered by COVID-19

The entry of the 50s and 60s generation into the e-commerce market has also led to an encouraging increase in the purchase of health and medical information as well as related products. According to the Ministry of Science and ICT survey, consumers who have purchased health-related products through internet shopping surged from 24.8% in 2019 to 41.9% in 2020. During the same period, the proportion of those purchasing ingredients and food increased from 35.0% to 51.7%.

This phenomenon is not limited to Korea. According to a survey by global market research firm Kantar, in the U.S. last year, the number of baby boomers (ages 56?74) who used e-commerce for the first time nearly tripled compared to the previous year after COVID-19.

An official from the distribution industry said, "In Korea, where internet usage and smartphone penetration rates are high, interest in internet shopping among the elderly has steadily existed but had not received much attention. However, COVID-19 became a catalyst for a rapid increase in purchasing experience."

Fundamental changes in the distribution industry

The changes brought about by shopping refugees stepping into the online shopping market are shaking the distribution industry.

The domestic e-commerce market recorded transaction amounts last year of 27 trillion won for Naver Shopping, 21 trillion won for Coupang, and 20 trillion won for eBay Korea. On the 11th, Coupang successfully listed on the New York Stock Exchange, receiving a valuation close to 100 trillion won. Meanwhile, Emart has entered into a strategic partnership including a 250 billion won share exchange with Naver. Kakao has also created a shopping tab on KakaoTalk, targeting the fully open mobile shopping era, and Lotte is searching for a new CEO to reorganize its Lotte ON business.

Department stores are transforming to focus on luxury goods. Lotte Department Store plans to fill half of its main store in Sogong-dong, Seoul, with luxury brands. Hyundai Department Store is decorating its 'The Hyundai' store in Yeouido, Seoul, like an indoor park, emphasizing the department store as an 'experience.' Large supermarkets are also reducing the proportion of daily necessities and reorganizing to focus on fresh foods and specialty stores.

An industry official said, "The generation that preferred traditional distribution in the conventional sense has now disappeared. With middle-aged and elderly people also starting to use e-commerce, offline distribution is facing a situation where it must find new avenues."

This content was produced with the assistance of AI translation services.