TLDR:
- VC funding for South Korean e-commerce startups has plummeted by 90% over the past two years.
- The e-commerce market in South Korea is facing challenges from falling demand post-pandemic and competition from Chinese rivals.
In a recent article by Eun-Yi Ko, it was highlighted that the e-commerce startup ecosystem in South Korea is experiencing a significant downturn. Linkshops, a once-promising Korean e-commerce startup, recently declared bankruptcy despite receiving funding from notable investors like Altos Ventures Management Inc. This is part of a larger trend where several Korean e-commerce startups have been forced to shut down due to a challenging market landscape. The total Series A funding for Korean e-commerce startups has decreased, showing the market’s pessimistic outlook.
While AI startups in Korea have seen an increase in funding and deals, e-commerce startups are facing difficulties. The market is crowded with big players like Coupang and Gmarket, along with competition from Chinese e-commerce platforms like AliExpress and Shein. Investors have little patience for funding e-commerce startups that struggle to turn a profit, leading to a decrease in funding for these ventures.
In an attempt to find new demand and escape the competitive market in Korea, some e-commerce startups are actively looking to expand into international markets. Companies like NoTag Shop, Go2Joy, and Maccaron have ventured into markets in Southeast Asia and India, leading to successful fundraising in Series A rounds. Pricing has become a crucial factor in the success of e-commerce ventures as the market becomes more competitive, leading to a shift in business strategies for these startups.
Overall, the blight of failing e-commerce startups in South Korea highlights the challenges and competition in the industry, with investors shifting their focus to other sectors like AI. The need for innovative business models and strategies is essential for survival and success in the e-commerce market.
