In South Korea, traditional family occasions like Chuseok and Seollal, once reserved for gatherings and gift-giving, are seeing a shift. With improved communication and accessibility, people are attending these gatherings less and opting to send gifts via gift cards instead. This shift has fueled robust growth in the gift card market in South Korea, with a solid Compound Annual Growth Rate (CAGR) of 10.3% from 2018 to 2022.
Moreover, gift-giving extends beyond special occasions as building relationships remains a cornerstone of Korean culture. Gift cards are now exchanged not only during celebrations but also on ordinary days to offer support or simply express care. In fact, it’s not just younger consumers, such as Gen Z and Alpha, who are embracing gift cards, but also older generations like Gen X and Y. With such dynamics at play, the market is expected to continue its growth trajectory, reaching USD 9 billion by 2028.
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The rise of the digital gift card market in South Korea
Amid the prolonged COVID-19 pandemic and continuous inflation, there has been a significant shift from physical to digital gift cards in South Korea. According to the Korea National Statistical Office, the total transaction volume for digital gift cards hit KRW 9.88 trillion in 2023. This marked a significant increase from KRW 3.38 trillion in 2019.
Data source: Korea National Statistical Office, designed by Daxue Consulting, Total transaction volume for digital gift cars from 2019 to 2023
Unlike in physical stores, customers can find the lowest-priced items among various online gift card platforms. The minimum price for digital gift cards is KRW 1,500, while physical gift cards typically start at KRW 10,000. This price difference reflects the growing appeal of digital gift cards for budget-conscious consumers seeking more economical gifting options.
Additionally, digital cards have become a lot more diversified. Digital gift cards have evolved beyond conventional offerings such as supermarket vouchers and tickets for theme parks and movies. They include lifestyle-related experiences like laundry services, language classes, and car-sharing services.
Strengthening relationships with digital gift cards
Similar to China, gift-giving in Korea plays a crucial role in fostering both personal and business relationships. It is deeply rooted in maintaining social harmony and also serves as a means of showing respect and building trust. According to the Embrain Trend Monitor, a significant 70.5% of consumers stated that online gifting features had a positive impact on maintaining and improving human relationships, even in a non-face-to-face context.
In addition, the shift in digital gifting highlights the demand for convenient and flexible options. This urges businesses to provide online gifted products. According to the Embrain Trend Monitor, 50.9% of respondents said that they liked using mobile gifting because they could buy and send gifts without worrying about time or location. 46.5% responded that they could send gifts without knowing the recipient’s location or address, and 44.5% praised the freedom for recipients to use the gifts at their convenience.
The collaborative dynamics driving the growth of the gift card market in South Korea
The gift card industry in South Korea is characterized by a diverse range of retailers, financial institutions, and online platforms. Major retailers include Lotte and E-Mart; financial institutions include KEB Hana Bank and Shinhan Bank; and online platforms include KakaoTalk and Naver Shopping. This diverse mix provides consumers with numerous choices for buying and using gift cards in the dynamic and rapidly evolving gift market.
KakaoTalk: a leader in digital cards in South Korea
In South Korea, KakaoTalk is the most popular social networking platform, utilized by people of all ages. Alongside its diverse array of features such as online shopping, hotel reservations, and gym bookings, KakaoTalk Gift stands out. This feature enables users to exchange gifts seamlessly within their daily interactions on KakaoTalk. Users can send and receive gifts to and from their KakaoTalk contacts, eliminating the need for phone numbers or addresses. Brands also often offer intricately packaged products exclusively available online, with delivery services included. Additionally, the platform reminds users about the past or upcoming birthdays of people in their contacts under the “friends with birthdays” section.
The popularity of KakaoTalk Gift has risen even more with its introduction of artificial intelligence under the “AI gift exploration” service in September 2023. This service aims to improve the gift recommendations, increase customer satisfaction, and compare the most popular gifts among users. It compiles a selection of potential gifts by analyzing the recipient’s service usage logs, which encompass publicly shared wish lists and the history of exchanged gifts. Kakao asserts that this information reflects the recipient’s preferences, thereby enhancing the likelihood of satisfaction with the received item. Additionally, the service considers similar things and gifts that have been traded, expanding its selection of suggested purchases.
Officecon: Targeting corporate businesses with streamlined gifting solutions
Similar to KakaoTalk Gift, Officecon offers a diverse range of gifts ranging from food to beauty products. However, its popularity is smaller than that of dominating online gifting services such as KakaoTalk Gift, Coupang Rocket Play, and Naver Shopping due to its limited range of brands.
Despite this, Officecon continues to dominate the corporate scene, particularly when it comes to serving corporations and businesses. Its allure is that it offers discounts on all of its product lines for corporations and businesses. Its efficiency is also unparalleled, allowing gift coupons to be distributed in less than 30 seconds to an unlimited number of recipients. As a result, Officecon has become the go-to platform for corporate giving, utilizing its economical solutions and optimized procedures to effectively serve the needs of enterprises.
Emerging trends and market leaders in South Korea’s evolving gift card landscape
- South Korea’s gift card market has experienced robust expansion. Koreans are becoming comfortable with buying gift cards and gifting them online.
- Gift cards have become more diverse. They are not only limited to traditional products and services like food and beverages and movie tickets. They have expanded to include lifestyle-related experiences like laundry services and language courses.
- Among the digital gift card leaders is KakaoTalk Gift. It is largely popular for its seamless gift exchange and AI-enhanced recommendations.
- Officecon offers efficient gifting solutions for corporations, leveraging discounts and streamlined processes to meet business needs effectively.
