Conflicting Overseas Direct Purchases Amid King Dollar... Japanese Market Energized by Yen Depreciation

Won-Dollar Exchange Rate at 1430 Won Level Leads to Decrease in US and Europe Overseas Direct Purchases
Record Low Yen Boosts Japan Direct Purchases...Industry Launches Marketing
Experts Say "If Price Competitiveness Is High, Direct Purchases Across Multiple Countries Are Possible"

Due to the unprecedented weak yen phenomenon, demand for direct purchases from Japan is increasing. The photo is not related to the specific content of the article. [Image source=Pixabay]

[Asia Economy, Intern Reporter Lee Gyehwa] While direct purchases from the US and Europe are decreasing due to the strong dollar and weak yen phenomenon, direct purchases from Japan are on the rise. This is attributed to the historically low yen value against the dollar, making shopping in Japan notably advantageous in terms of price. As the high exchange rate situation shows signs of prolonging, this trend is expected to continue.

The strong dollar is causing changes in the overseas direct purchase market. As the won-dollar exchange rate soars, product prices have increased, leading to a decline in consumers directly purchasing from overseas markets such as the US and Europe. According to the Bank of Korea on the 11th, the amount of online shopping overseas direct purchases in the second quarter was $1.03 billion (KRW 1.4807 trillion), down 9.2% from $1.14 billion (KRW 1.6394 trillion) in the first quarter. Compared to the fourth quarter of last year ($1.28 billion), it decreased by 19.6%.

Although overseas direct purchases have decreased due to the strong dollar, consumers interested in shopping for Japanese products have increased due to the historic yen depreciation. According to Statistics Korea, the scale of direct purchases from Japan in the second quarter was KRW 103.8 billion, up 11.7% compared to the first quarter. Japan is the only country where the scale of overseas direct purchases increased in the second quarter this year, and compared to last year, the amount of direct purchases from Japan surged 31.1% year-on-year for the same period.

This is closely related to the won-dollar exchange rate hovering around 1,430 won, while the yen exchange rate, which was around 1,040 won per 100 yen at the beginning of the year, dropped to the 980 won level. For example, if a $100 product cost 1.2 million won at the beginning of the year, it now costs 1.4 million won, meaning consumers have to pay 200,000 won more. However, since the price difference compared to domestic prices is minimal, and as of the 11th, the yen value per dollar is around 145 yen, down more than 20% from the end of last year (115.07 yen), Japanese product prices have become cheaper.

As the value of the Japanese yen declines, patterns of overseas direct purchases are changing. The photo is not related to the specific content of the article. [Image source=Yonhap News]

As consumer patterns for overseas direct purchases change, the industry has also launched marketing efforts. With the strong dollar phenomenon continuing and direct purchases from the US and Europe shrinking, Lotte On has pre-secured 150 popular direct purchase products and is holding discount events throughout October to reduce consumers' exchange rate burdens. Shilla Duty Free Seoul branch is also offering additional exchange rate compensation benefits of up to 7% of the purchase amount if the won-dollar exchange rate exceeds 1,400 won on the day, until the 14th of next month. 11st plans to showcase popular products with high discount rates and price competitiveness in cooperation with Amazon.

Furthermore, as the number of Japanese direct purchase customers has increased significantly, Lotte Duty Free has established a dedicated Japanese direct purchase section on its overseas direct purchase online mall. Japanese hair products and cosmetics are about 30% cheaper compared to other Japanese direct purchase sites. Additionally, to commemorate the opening of the Japanese direct purchase section, various events such as free shipping until the end of this month, gifticon lotteries, and Lotte Card billing discounts until the end of the year are being offered.

Interest in Japanese direct purchases can also be seen in related online communities where posts inquire about how to make direct purchases from Japan. One netizen said, "The dollar is too expensive these days, making US and European overseas direct purchases difficult. Recently, the dollar-to-yen exchange rate is high, so Japanese direct purchases are increasing. I am looking into proxy purchase services and purchase sites." They added, "After comparing brands good for Japanese direct purchases, there is a significant price difference compared to domestic prices." They also said, "If you carefully check shipping fees and customs duties, you can buy items you like at a reasonable price."

Experts analyze that consumers shop strategically according to exchange rate fluctuations. Professor Lee Eunhee of Inha University’s Department of Consumer Studies said, "In a high exchange rate situation, consumers are very sensitive to exchange rates." She added, "Nowadays, consumers shop globally, comparing exchange rates between countries like the US and Japan to purchase from the more advantageous side." She further explained, "If the price competitiveness is high after searching, consumers are likely to make direct purchases across multiple countries." She predicted, "This phenomenon is expected to continue for the time being due to the high exchange rate."

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