According to the Statistics Korea, the domestic retail market size last year was estimated at about 514 trillion won, showing a growth of around 1% compared to the previous year. This year, low growth is expected to be unavoidable due to complex crises such as the impeachment situation, the inauguration of the second term of the Trump administration in the United States, entry into a super-aged society, abnormal weather, and minimum wage increases. The Korea Chamber of Commerce and Industry has predicted a retail market growth rate of 0.4% for this year. CHOSUNBIZ examines what distribution is appropriate for the low-growth era as the new year begins, and what opportunities the distribution industry should seize. [Editor’s note]
As the era of YouTube and TikTok has arrived, the format of traditional distribution, which previously sold through existing online and offline channels, is being overturned. Creators are generating substantial profits by directly selling products to consumers through their content on these platforms. This phenomenon is called the 'Creator Economy'.
The Creator Economy refers to a new economic model in which creators producing and sharing content generate revenue through their content. It has rapidly grown alongside the spread of digital platforms such as YouTube, TikTok, Instagram, and Twitch.
The platforms where creators operate, such as YouTube and Instagram, have emerged as major shopping channels. Creators introduce products through their content, thereby increasing sales. Even existing shopping platforms like Coupang are utilizing this by linking their sales to YouTube content.
◇ Viewing content and making purchase decisions… YouTube has emerged as a shopping platform
According to the industry on the 8th, the activation of the Creator Economy is attributed to the environment where content can be created and revenue can be generated using just a smartphone. Due to low entry barriers, along with the increasing revenue and social influence of YouTubers and influencers, a new distribution business based on this has started.
YouTube, which can be regarded as the main source, is currently creating over 800,000 jobs worldwide. The total investment in related companies in 2021 exceeded 6 trillion won. According to a report on creators published by the U.S. software company Adobe, 4 out of 10 South Koreans (17.5 million people) and 3 out of 10 individuals in the U.S., U.K., and Germany are active as creators.
In South Korea, after YouTube introduced shopping features in 2023, it launched the world's first 'shopping-exclusive store' service last year, leading to the activation of creator-based sales.
Previously, products from manufacturers were sold to consumers through online and offline distributors, whereas now creators sell products directly to consumers through YouTube and take charge of product sales and promotions.
Not only YouTube but also Instagram can interlink shop functions. In the U.S., TikTok Shop was introduced last year. The appealing points of the Creator Economy to consumers include informativeness and reliability. Through content such as reviews or tutorials created by creators, consumers can intuitively understand the practical usage and benefits of the products. This is why unboxing videos on YouTube or product demonstration videos through TikTok shorts are gaining popularity.
As a result, Goldman Sachs predicts that the global creator business market will grow from $250 billion (about 320 trillion won) in 2022 to $480 billion (about 615 trillion won) by 2027. The Creator Economy market is expected to continue growing steadily.
Even established e-commerce platforms like Coupang are utilizing YouTube shopping. This is an attempt to strengthen consumer touchpoints by merging the Creator Economy with existing e-commerce. The goal is to provide a content-based consumer experience beyond online shopping platforms.
Through the Coupang Partners program, creators can insert Coupang product links into their YouTube content, and if a purchase is made from the product featured in the content, the creator earns a certain percentage of revenue. They also support content creation such as reviews, unboxings, or product usage methods in collaboration with popular creators.
◇ Influencers directly branding and group buying… The power of 'fandom consumption'
Another pillar of the Creator Economy is 'brand building.' Influencers who gain popularity through their content can create their own brands based on their influence and achieve success.
When influencers plan and sell products based on their names or identities, fans trust their brands and actively purchase them. This is the so-called 'fandom consumption' culture based on high customer loyalty.
A notable example is Feastables, the chocolate bar business started in 2022 by MrBeast, the world's top YouTuber with 272 million subscribers. MrBeast frequently promotes this chocolate through his videos. There are evaluations that popular beauty YouTubers, such as Pony Effect and Too Slashed Four, have successfully established themselves in the market in South Korea.
The power of fandom consumption is also evident in the spread of the group buying culture on Instagram. Group buying occurs when influencers introduce products such as clothing, diet enzymes, protein shakes, diet tea, and cosmetics on social networking services (SNS) and temporarily open a purchase window for consumers to access and buy.
According to a 2020 SNS usage survey conducted by the Seoul e-commerce center, 90% (3,636 people) of 4,000 respondents used SNS, and among them, 52.1% (1,893 people) were found to shop through SNS markets like group buying. As the group buying culture spread, the term 'I2C (Influencer to Customer)' emerged in academia.
Oh Jong-cheol, CEO of the influencer multi-channel network (MCN) Anmokgosu, noted, 'In the past, consumers simply perceived that goods sold in department stores were good, whereas now influencers become leaders of consumer groups with specific preferences and lifestyles.'
He continued, 'SNS followers cheer for, support, and unite around the influencer’s choices,' adding that 'they believe that following the chosen items reduces the time and risk of failure experienced when making personal choices.'