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Why South Korean eCommerce Brands Need Chat Commerce

With over 92% of the population plugged-in to high-speed internet, South Korea’s eCommerce market is booming. The industry is expected to surpass US$242 billion in value by 2025, according to GlobalData. Even now, 65% of online transactions happen on mobile and 94% of South Koreans aged between 20- and 39-years are avid online shoppers. Naturally, South Koreans have embraced shopping via instant messaging platforms and virtual assistants like chatbots – a trend known as conversational commerce. 

First coined in 2015 by Uber executive Chris Messina, the idea to include messaging applications as part of omnichannel marketing has only recently made headway. Like the in-store experience of a physical outlet staffed by retail assistants, chat commerce aims to deliver convenience, personalisation, and decision support for online shoppers. But as consumer demands shift, providing 24/7 support is now par for the course – and businesses are deploying chatbots to keep up. By 2024, Insider Intelligence estimates that consumer retail spending on chatbots worldwide will reach US$142 billion. A year after that, China, Japan, and South Korea will together account for more than 90% of chatbot transactions, according to Juniper Research.

Amid rising demand for personalised digital and mobile experiences, South Korean retail brands have a lot to gain from adding chat commerce to their marketing technology (MarTech) stack in 2022. 

Booming eCommerce Market

illustration of south korea ecommerce landscape
Source: Global Data, Insider Intelligence, Juniper Research, and Business Korea

South Korea’s eCommerce market is highly fragmented, giving consumers and merchants plenty of choice. And due to low barriers of entry, brands have become active users of eCommerce websites as well as Shopify stores, in addition to virtual storefronts on online marketplaces and eCommerce platforms such as KakaoTalk, Naver, and Coupang. The introduction of Kakao Corp’s eCommerce service, Talk Channel 2.0, disrupted the online retail market in mid-2021 by enabling brands to go direct-to-consumer. Kakao charges zero commissions while allowing brands and enterprise customers to leverage simple log-in and payment systems. In addition, the platform shares data on customers with its users. 

The service makes it easy for brands to connect with their customers and engage them inside the KakaoTalk ecosystem by:

  • Giving updates on order, payment, and delivery
  • Enabling authentication and one-click payment
  • Sending targeted messages upon integration with customer relationship manager (CRM) and customer data platforms (CDP) tools 
  • Providing personalised consultations on queries and orders using a chatbot

Alternatively, some brands choose to directly embed the chat commerce experience in their own eCommerce websites so consumers can interact with a chatbot to process orders, deliveries, cancellations, and refunds, and to ask for recommendations. 

The Omnichannel  CX omnichannel marketing chatbots

Given the wide array of MarTech tools available to brands today, building a seamless omnichannel experience with chat commerce and chatbots doesn’t have to be daunting. Marketers can follow this simple four-point checklist:

Integration, not separation

To realise their full potential, chat commerce must be integrated with the omnichannel workflow as well as the MarTech stack, specifically with CRMs, CDPs, Brand.com, and eCommerce platforms. Doing so will give marketers a 360-degree view of the customer, which yields myriad benefits down the line such as 1:1 personalisation, streamlined communications and campaigns, and faster time-to-resolution.

Find the right partners

Marketers should work with partners who are a good fit in terms of helping them design, build, and operate a conversational user interface (CUI) that’s tailored to their needs. Whether building from scratch or enlisting a third-party, conversational commerce requires ongoing and real-time technical support, continuous improvement, and a long-term roadmap.

Get the basics right 

Most customers aren’t looking to have a lengthy conversation with brands, but rather to make a purchase as simply as possible. When starting out, it’s best to ensure the chatbot can deliver straightforward utility and functionality before letting it take on more human-like interactions. 

End-to-end journey

For a smooth end-to-end experience, customers should be allowed to interact with the chatbot at any point in the path to purchase. That means training it to be ready for a variety of situations and queries, from providing product recommendations to helping customers complete a purchase via their preferred payment channel. 

Leveraging Chat Commerce

Conversational commerce can give retail brands the edge in an increasingly crowded online marketplace. And for South Korean brands, it’s quickly becoming essential to driving conversion in an omnichannel environment. Marketers should seize the opportunity to move away from transactional or one-off relationships with consumers, and instead tap into marketing automation tools that can help deepen their connection with customers.

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Yih Cheng Yak

Head of Consulting,
Marketing Technology

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