71248
‘Amazon Effect’ Plagues South Korea Economy
‘Amazon Effect’ Plagues South Korea Economy

‘Amazon Effect’ Plagues South Korea Economy

‘Amazon Effect’ Plagues South Korea Economy

The explosive penetration of e-commerce is expanding low-income jobs and thus is undermining the national economy of South Korea in general.
Through fierce price wars between internet commerce giants and traditional brick-and-mortar retail businesses, the latter have been forced to lower the salary or have gone bankrupt amid dwindling margins. This has created a vicious cycle of tough price competition and lower salaries. Such a phenomenon has been called the “Amazon effect”, Yonhap reported.
The Amazon effect is increasingly shadowing many small enterprises and self-employed businesses, making it more difficult for them to escape from having to pay their workers low wages.
According to the Korea Ministry of Trade, Industry and Energy on Sunday, e-commerce businesses are rapidly boosting their presence in the domestic retail market. Internet open market services such as Gmarket, Auction and Interpark, and social commerce businesses including Coupang, Ticket Monster and WeMakePrice recorded 18.1% average sales growth rate year-on-year in 2016, up from 16% in the previous year.
In the meantime, consumers are also spending more through e-commerce. According to the Bank of Korea, individual consumers spent about 5.5 trillion won ($49 billion) in May this year on internet shopping. This was the largest amount of spending since the central bank started to establish data on this in 2009.
The problem is that the Amazon effect may have a greater negative impact on Korea’s export-centric economic system. Large conglomerates here such as Samsung Electronics may create more high-income job opportunities by expanding their businesses while selling more products and services overseas.
On the other hand, most large-size e-commerce businesses in Korea are focused on the domestic retail market, not markets overseas, and are consequently forcing traditional retailers into price competitions. In the process, large retailers seek solutions by diversifying their retail channels online, which is difficult for smaller businesses to keep up with.
“Sadly, the rapid growth of the e-commerce industry here has been fueled by the decline of traditional retailers, especially small-sized and self-employed outlets,” an industry source said. “Many have already projected that technology will eliminate a great deal of traditional jobs, increasing the number of low-paying jobs.”

Short URL : https://goo.gl/k4u1LW
  1. https://goo.gl/szGSGD
  • https://goo.gl/T1U8EE
  • https://goo.gl/GMVjcR
  • https://goo.gl/QASTTS
  • https://goo.gl/C3NLJ7

You can also read ...

Bithumb Hacked, $32m in Cryptocurrency Stolen
Cryptocurrencies dropped after the second South Korean...
South Africa GDP Shrinks
South African gross domestic product shrank 2.2% in the first...
Washington in March imposed tariffs of 25% on steel and 10% on aluminum, in a move mainly aimed at curbing imports from China.
Russia said on Tuesday it would impose import duties on US...
Saudi Arabia, which employs about two-thirds of its citizens, is chipping away at a budget deficit that ballooned to almost 16% of GDP after the oil shock of 2014, while FDI slumped more than 80% last year.
Show up, swipe in. The routine is familiar to office workers...
Taxes in Italy Drive Economy Underground
Italy grew rapidly over the 20th century, and its black market...
European businesses say it has become harder to do  business in China over the past year.
European companies complain they still face a tough business...
Australian Telecom Co. to Axe 8,000 Jobs
Australia’s dominant telecommunications company Telstra...
South Korea to Grow 3 Percent
The Organization for Economic Cooperation and Development has...

Add new comment

Read our comment policy before posting your viewpoints

Trending

Googleplus