SOUTH KOREA. The duty free sector’s overwhelming reliance on daigou traders who resell their purchases in China was starkly portrayed in a fascinating Korea JoongAng Daily* article last week.
Noting that duty free stores are “rolling out the red carpet to professional Chinese resellers”, the article suggests that stores have become “mini-broadcasting studios who hawk products live to customers back in China”.
That will be familiar news to any brand or travel retailer to whom the sight of Chinese resellers filming and talking on their mobile devices has long been part of the business in the Republic (and other markets).
The same applies to the use of influencers (‘wanghong’) broadcasting live and promoting a variety of products. A spokesperson for an unnamed retailer cited in the article said that commissions to influencers range from 15 to 25 percent, depending on their popularity.
CJ Olive Young, South Korea’s largest beauty store chain, has taken the concept of working with resellers and influencers to a new level. The company made its travel retail debut by opening a boutique in Hyundai Department Store Duty Free’s store in Dongdaemun, Seoul on 15 March, in which it has placed a broadcasting studio.
“Considering the area is visited a lot by foreign tourists and influencers, we created a broadcasting studio in the store,” a spokesperson for CJ Olive Young told Korea JoongAng Daily. “We will support wanghong and other influencers so they can do live streams, which will allow us to target not only tourists but also customers abroad.”
A filming booth has even been set up in the middle of the store, equipped with LED lighting, camera mounts and backdrops to make it easier for people who want to livestream, the report said.
Following a visit to Shinsegae Duty Free in Myeong-dong, Seoul, reporter Lee Tae-Hee describes a team of Chinese resellers livestreaming on Douyin at the MLB store. “One woman was on her smartphone, filming her teammate showing off sweatshirts, baseball jackets, t-shirts and caps. The store was empty of actual customers. But it was jammed with opened cartons of clothes, which team members rummaged through to find items to hawk on the live stream.”
Commenting on the rocketing commissions that have eroded duty free retailers’ margins, the article points out that retailers used to pay commissions to tour agencies to bring resellers to their stores (15-35% of bulk purchases). With group tours now non-existent because of the pandemic, commissions are now paid direct to the traders.
Some US$1.9 billion was paid out in commissions last year, a +155.6% rise year-on-year and a +76% increase over pre-pandemic 2019, the report said, quoting the Korea Duty Free Association.
Click here for the full article.
*The Korea JoongAng Daily is an English-language daily published by the JoongAng Group, Korea’s leading media group, in association with The New York Times.
