Growth of Online Gift-giving Service
With COVID-19 spreading worldwide, contact-less marketing is going mainstream. It has been more than ten years since online gift-giving services started in Korea. But in the meantime, people only used those services for holidays, family month (May), or anniversaries. However, as non-face-to-face consumption spreads rapidly due to a prolonged COVID-19, the sales of online gift-giving platforms in 2021 increased by 52% compared to the previous year. About 7 out of 10 Koreans have tried sending or receiving something with the use of online gift-giving services. The size of the online gift-giving market is estimated to be 4 trillion won based on the transaction amount last year. Considering the size of the domestic e-commerce market was about 150 trillion won in 2020, its share is still small, but it is clear that the market has a high potential. Online shopping platforms such as Coupang, 11st, Baemin, Yogiyo, The Hyundai.com, and Shinsegae TV Shopping, have strengthened their online gift services to tap into this trend. Even banks and insurance companies have offered stocks and plans as gift products. As a result, the quality and quantity of the online gift market are growing remarkably. This boom has had a significant impact on the gift-giving culture of Korea.
New Trend 1: Everyday Gift
Gifts used to be exchanged only to celebrate special occasions between close friends because there was a hassle of meeting in person or sharing addresses to deliver presents. But now, the entry barrier for giftgiving has been lowered, dramatically changing the attitude of consumers. For example, male users in their twenties and thirties used to be shy of celebrating anniversaries, birthdays, or any special occasions because they often found it hard to decide what to give and where to buy. Now they feel comfortable giving gifts to their friends, thanks to online gift-giving services. Moreover, online gifts became a communication tool to express emotional support in daily life —a refreshing drink for a burned-out friend or a pizza for someone who has reached their diet goals. Gifts are now in daily messages and chats. Everything can become a gift at any time.
New Trend 2: Gift for Fun
The context of gift-giving has become more diverse. “MZ generation,” a term that encompasses Millennials and Generation Z in Korea, is flexible to change. They are open to new and unique things and do not spare money or time to spend on what they like. The emergence of the term “Funsumer” shows their characteristics that they consume “fun,” not caring about practicality. For example, one of the trends among MZers is exchanging useless gifts for fun, such as a toilet paper roll with a politician’s face on it and a traffic sign used on the road. Reflecting this trend, 11st has created a category for unique gift items on its platform. Kakao also has a “useless gift” category.
New Trend 3: Premium Gift
Until a few years ago, most consumers bought coffee vouchers in online gift shops. But as the market is revitalized, the range of products has dramatically diversified from dining coupons and class vouchers to health and beauty products and even fuel vouchers. Moreover, the range of product prices has been expanded due to the increase in middle-aged users with high purchasing power. A wide selection of merchandise, from sundries to apparel and small luxuries like accessories and lipstick, has diversified the gifting context. In the case of SSG.com, the sales growth of luxury bags and premium strollers skyrocketed. Small luxury gifts from imported cosmetics brands were also highly preferred. Highend cosmetic items, such as Dior Lip Glow, Jo Malone Hand Cream, and Chanel Lip Balm, ranked high on the gifts list of SSG.com.
What is GIFTICON
Gifticon is a compound word for “gift” and “icon.” SK Planet created this word, but it became a common word. It is in a bar code and can be sent and received using MMS or KakaoTalk, a Korean messaging app.
Various online gift-giving platforms
Each company is working hard to increase the convenience features of its platforms. Among the various players, Kakao Commerce, which started the service in 2010, is the leading company, as its platform sells over 500,000 products partnered with 8,000 brands. According to the Korea Fair Trade Commission’s “Online Gifting Service Market Size Survey,” Kakao Commerce accounts for 84.5% of the total market. However, as powerful e-commerce companies are eager to enter this field, the market landscape can be possibly changed.
Example: Kakao Commerce
– Access KakaoTalk app > Click the three dots at the bottom right > Click the “Gifts” icon > Select a product > Click the “Give a Gift” button > Choose friends by Name or Phone Number > Make a payment > Click “Order History” to check the gift history – From your friend’s wish list or the gift trend rankings shown by gender and price range, you can find what your friend wants to have and the most sold products. – The recipient can change the product option from color to fragrance when entering their shipping addresses. – With “Gift for biz,” a gift platform for business owners, you can quickly and easily send large gifts for events or marketing. – “KakaoTalk Gift” service is limited in the following cases: non-Korean mobile number or non-KakaoTalk member users, users with unsupported operating systems (devices other than Android and iOS), and users temporarily restricted from using KakaoTalk
How to use?
The gift can be a voucher used online or offline or a product shipped to recipients. How to use a coupon Go to the store and show the counter staff a gift certificate with a barcode, then they will give you the product. Depending on the brand, you may not order a different item in the same price range. For example, Starbucks, Paris Baguette, and Baskin Robbins allow menu changes. How to use a food delivery coupon Call the store, tell them you want to use “Gifticon,” or offer the code of online coupons. Or you can go to the brand’s website, select a branch to order, choose to order with “Gifticon,” and then enter the gift code. Again, depending on the brand, it may be possible to order a different product or menu in the same price range. In the case of Domino’s, it is impossible to change a menu, say from Coke to Sprite. How to use a delivery item coupon The recipient enters their address and receives the product.
Precautions for use
– Payment scams: Platforms do not allow direct transactions between sellers and buyers to prevent consumer harm. Please be aware that damage may occur when dealing directly with the seller you meet on the platform without using the platform’s payment system. – Beware of theft: The barcode or digit code of gift vouchers should never be shared online because someone else can take a screenshot or use the code for their interest. – Validation period: Mostly, gift coupons have three months (93 days) of the validation period. When the expiration date approaches, the recipient can extend the validity period for another three months. Within the initial validity period, only those who send gifts have the right to cancel the payment or request a full refund of the purchase price. After the initial validity period, the recipient can request a 90% refund of the product price. For expired vouchers, recipients will get a 90% refund of the product price if they request within five years from the issuance date.
Legal issue
E-commerce companies such as Kakao Commerce, Naver, and 11st came under criticism for lack of consideration for consumers in the refund policy. As mentioned above, only the sender of the gift can request a refund within the initial validity period. In this case, they can get a 100% refund. However, if the gift recipient requests a refund after the initial validity period, a 10% fee will be deducted. Companies explain about this policy that not using gift vouchers can incur an operating cost, considered a breach of contract, which is why consumers should charge a 10% fee. However, as the operating cost of online stores is not the same as that of offline stores, many think a refund fee for a gift voucher seems excessive. Under this refund policy, Kakao Commerce has collected more than 70 billion won from refund fees for the past five years. Constant criticisms are that the refund fee for online gift certificates is excessive, and improvement is urgently needed. Also, most platforms, including Kakao Commerce, receive a 10% commission on the profit of the self-employed. Such an excessively high commission puts pressure on small business owners. It induces them to refuse customers to use online vouchers or sell only in batches, harming consumer rights. According to the Consumer Complaint Center, customers are denied the purchase of goods or food for the reasons: online gift vouchers are not accepted on holidays; delivery is being delayed; delivery is not available in your area. Some stores intentionally deliver smaller-sized beverages when customers use a coupon.
Consultation for foreigners If you complain about using gift-giving services, contact the Consumer Consultation Center in Korea. Professional counselors in the center will provide advice and information in case of any inconvenience or damage during consumption. The Korea Consumer Agency The Korea Consumer Agency operates a counseling line for foreign consumers residing in Korea in conjunction with the Foreigner Information Center of the Ministry of Justice. • Contact: 043-880-5400 • Hours: Weekdays 09:00~18:00 (Lunchtime 12:00~13:00) • Languages available: Korean, Chinese, English, Vietnamese, Thai, Japanese, Mongolian, Indonesian/Malay, French, Bangladeshi, Pakistani, Russian, Nepali, Cambodian, Myanmarese, German, Spanish, Filipino, Arabic, Sinhalese
Case Studies
<1> On her birthday, Ms. A received a pizza coupon from her friend through KakaoTalk. She tried ordering a pizza with her coupon, but the store refused to take that. The store owner asked for her understanding, saying, “When a fee is deducted, there isn’t much profit. So we decided not to accept coupons in our store.” She tried to use her coupon at another store, but the owner asked her to pay an additional 1,000 won for using the voucher. Q. What should I do if stores refuse to take it? Consumers can use all gift coupons at any affiliated store except in certain cases. It is unreasonable to refuse to take a coupon or ask for an extra payment. Or, if your delivery is delayed too long, you can request a cash refund from the platform.
<2> Mr. B tried to gift a fried chicken coupon to his colleague through an online gift-giving platform. He wanted to purchase a voucher for a fried chicken, but there was no option other than a set — a fried chicken and soda. Mr. B said, “Since my colleague doesn’t enjoy soda, I only wanted to give him a single fried chicken. But I couldn’t.” Q. Can I use only a part of the gift coupon and get the rest back? According to the Consumer Dispute Resolution Standards by the Fair Trade Commission, 60% of the remaining balance (however, 80% for less than 10,000 won) can be returned in cash when used. However, in most cases, coupons can only be exchanged for specific products. Even if it is possible to exchange that for a different item, the balance will not be refunded. Still, if you exceed the purchase amount, you can purchase additional products by paying the difference. <3> Mr. C did not use a voucher for the online English course within the validity period.
Q. Can he request a refund for an unused voucher? A. Under the Fair Trade Commission’s「Consumer Protection Voluntary Compliance Guidelines」, if a consumer fails to use a voucher within the validity period, 70% or more of the coupon’s value will be accumulated as points that should be used within at least six months. The「Consumer Dispute Resolution Standards (New Type Gift Certificate)」 recommends refunding 90% of the purchase price if requested within five years from the date of purchase.
Conclusion
No one would expect that a gift could be exchanged on online platforms. But now online gift-giving services are becoming more common, gradually changing the everyday life of Koreans. More and more people feel comfortable giving and taking gifts on messaging apps. By doing so, they can maintain relationships and catch up on their lives. Still, institutional improvements are needed to protect both consumers and microbusiness owners.
(Source:Korean Ministry of Justice Recent Trends of Law& Regulation in Korea Vol.37 )