4 Catalyst to growth in South Korea Warehouse Automation Market: Ken Research

South Korea’s warehouse automation market is booming, driven by e-commerce growth, demand for efficient logistics, labor shortages, and aging population. This article explores the key catalysts behind its rapid growth.

Storyline

• E-Commerce Surge: South Korea’s e-commerce market booms, ranking 6th globally with sales surpassing USD 180 Bn in 2022.

• Logistics Demands Soar: Increasing online sales and same-day delivery expectations drive the urgent need for automated warehouses to handle rising logistics demands efficiently.

• Labor Shortages Spur Automation: With an aging population and labor scarcity, South Korea turns to automation solutions to overcome labor shortages and scale operations.

• Embracing Digitalization: South Korea embraces advanced warehousing techniques like ASRS and digitalization for accurate tracking, forecasting, and streamlined stock management.

Introduction

South Korea’s e-commerce industry has grown exponentially, making it the sixth largest market globally with nearly 210 trillion South Korean won in sales in 2022. Fueled by COVID-19, online shopping has surged, necessitating efficient warehousing and logistics solutions. To meet the demand for large warehouses and same-day delivery, companies are turning to automation technologies to streamline operations and address labor shortages. This article delves into South Korea’s evolving e-commerce landscape, the emphasis on digitalization, and the growing need for automation in warehousing and delivery services.

1. E-Commerce Growth: E-commerce sales in South Korea amounted to almost 210 trillion South Korean won in 2022.

Read More: South Korea Warehouse Automation Market

Online shopping transaction volume in South Korea from 2010 to 2022(in trillion Korean won)

• Hence, companies are continuously moving towards automating their warehouses in order to fulfill high volume of order efficiently with minimum possible errors.
• This is rapidly generating need for large warehouse capacity with proper automation to tackle increasing logistics demands with increasing same day delivery demands.
• The value of e-commerce sales in South Korea amounted to almost 210 trillion South Korean won in 2022. The popularity of online shopping via different e-commerce channels has continuously grown over the last years. This was especially true in the last year due to the effects of COVID-19, as the South Korean e-commerce market experienced an increase.
• South Korea is the 6^th largest market for e-commerce

2. As labor shortage rises South Korea looks to foreign workers

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Shortage rate of the data experts in South Korea in 2021, by profession

• General merchandise, Retail, E-commerce etc. companies are readily adopting automation technologies to grow and expand their business in line with changing business environment.
• This will allow these companies to scale their business independently of issues including expensive labor and labor shortage.
• Further, labor shortage is expected in coming years due to fast ageing population of the country and low fertility rate.
• This leads to accelerate the demand for automation solutions to offset insufficient warehousing labor.

3. Rise in demand for Same-day Delivery

Online food delivery is a growing market worldwide, with an estimated number of around 1.96 Bn people using such services in 2021. In South Korea, around 31.5% of households ordered food delivery that same year. This was often done for reasons of convenience and the possibility of limiting contact with others. Mobile and online ordering was the method of choice for around 47 percent of consumers in South Korea.

Increasing customers demand for same-day delivery mainly driven by pandemic which have led to manifold increase in online sales and bulk orders with same-day delivery preference such as grocery shopping. This will influence the companies to automate their warehouses to fulfill the rise in demand.

4. Increasing Focus on Digitalization

• The increasing digitization is paving way for automated warehousing technologies, ASRS and several other advanced techniques of warehousing in the country.
• Automation allows for more accurate tracking, forecasting and stock replenishment.

According to Ken Research: South Korea’s warehouse automation market is thriving due to e-commerce growth, same-day delivery demand, labor shortages, and digitalization. Companies are investing in automated warehousing technologies to scale operations, overcome labor challenges, and achieve efficiency, accuracy, and cost-effectiveness. Embracing automation positions them for success in South Korea’s evolving market.

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