Korea’s agricultural direct online sales top $753 mn per month

‘ERUM Farm,’ a seller of Naju pears, now available on 11st’s Fresh Table. (11st)

South Korea’s monthly online trade of agricultural, livestock, and fisheries products surpassed the 1 trillion won ($753 million) mark for the first time. The rise is attributed to a streamlined distribution process, allowing for more direct transactions between producers and consumers and driving down prices. E-commerce giants such as AliExpress, SSG.com, and 11st have also bolstered this growth with aggressive promotional campaigns aimed at fresh produce.

According to Statistics Korea on Tuesday, online transactions of agricultural products from January to July 2024 amounted to 7.31 trillion won, up 24 percent from a year earlier, and the average monthly transaction value exceeded 1 trillion won for the first time. Experts predict that the total volume of online transactions for 2024 will top 12 trillion won if the current pace continues, tripling the market size from 2019. This accounts for roughly 17 percent of Korea’s estimated 70 trillion won agricultural sector.

The rise in online trade stems from the reduced distribution layers facilitated by e-commerce. Agricultural products traditionally go through several intermediaries, from wholesale market corporations to middlemen and retailers, often adding multiple rounds of fees before reaching consumers. In contrast, e-commerce platforms allow for direct transactions between producers and consumers or, at most, involve one intermediary, which significantly reduces distribution margins.

South Korea’s Ministry of Agriculture, Food and Rural Affairs has noted that direct trade via online platforms can cut distribution costs by as much as 10 percent when compared to traditional wholesale market channels.

Competition among major e-commerce platforms to dominate the fresh food market is also intensifying. Platforms such as 11st have seen a steady increase in agricultural vendors participating in direct sales, with some vendors earning over 100 million won monthly.

Price competition remains fierce, with e-commerce platforms pouring resources into promotional campaigns to differentiate themselves. AliExpress Korea, for example, recently held a sale on Korean agricultural products, including Nonsan strawberries and Seongju oriental melons, which sold out quickly.

The Korean government’s recent push to improve agricultural distribution channels is also expected to accelerate the growth of the online trade market. The agricultural ministry announced earlier in 2024 that it would offer incentives to e-commerce platforms that reduce commission fees for vendors and support price stability measures. Platforms that offer commission waivers or discounts to sellers are likely to benefit from this program, which could further bolster the sector’s expansion.