VOL.69/2024.04

South Korea's publishing industry

The offline distribution status of South Korea's publishing industry

2017.7.28

From publishers to large-scale bookstores, regional bookshops and second-hand bookstores, South Korea's offline book distribution structure is detailed as it is diverse. This is a close look into South Korea's offline publication distribution structure and the issues surrounding it.

Differences in growth per bookstore size

According to a biennial survey carried out by the Korea Federation of Bookstore Association, there were 2,116 offline bookstores in South Korea as of 2015. This was 38 percent less than a decade ago when the country had 3,429 bookstores in 2005. The decline was mainly driven by smaller bookstores closing down, whereas the number of larger bookstores over 330 square feet rose 8 percent over the same period from 262 to 283. This outlined the trend that although the headline number of bookstores is on the decline, the physical size of bookstores is expanding. Currently, 30 percent of the three biggest bookstore chains including Kyobo Bookstore in the country are locations that opened after 2016 and these chains are expanding locations aggressively in newly built shopping malls nationwide.

South Korea's publication distribution system

One characteristic of South Korea's publication distribution system is that large-scale bookstores and publishers usually trade directly while smaller, regional bookstores and second-hand bookshops can be seen doing business with a middleman, usually a wholesaler (regular books) or regional store for educational workbooks and magazines. Also policy-wise, a loose fixed-price system is in place where retail bookstores can provide up to 15 percent in discounts to consumers.
In terms of trade, bookstores can either directly purchase published works from publishers or wholesalers to sell, or they can take on a quasi-middleman role and sell books while allowing returns for refunds to be made directly to the publisher. In the case of books that sell well, bookstores prefer the former as it allows for more profit, but in most cases the latter method is overwhelmingly more used as there is less risk for bookstores. As of November 2014, when the regulation for fixed prices on books was reinforced, there has been a sharp decline in price competition through discounts. Prior to this, there was no limit to the discount rate for books after 18 months following their publication date, spurring online booksellers to slash prices by up to 50 percent, but the regulation now limits all discounts at 15 percent. After this change in the distribution system, the country saw more than 200 small, unique bookstores established. Some newly created bookstores no longer sell educational workbooks but are creating a new bookstore culture by holding diverse events while using a comprehensive management strategy for more revenue, selections and consumer concentration. It's a unique, experimental strategy for South Korean bookstores to bypass the educational books route but their efforts to survive by expanding ways to stay in contact with readers are notable. Meanwhile, 'Seojeom(bookstore) ON' is a government-funded bookstore portal site that aims to connect the point of sales (POS) systems of the country's secondhand bookstores. It analyzes the POS systems of roughly 200 used bookstores nationwide, what their book inventories are and provides lists of recommended books in order to boost the competitiveness of regional bookstores.

‘Corporate-form Secondhand Bookstores’ in the Spotlight

One recently notable point in South Korea's offline bookstore and publishing culture is the spread of corporate-form secondhand bookstores. In a step apart from previous bookstores that were often run by individuals, large online bookstores have now established offline stores to handle used books. Their influence has been spreading quickly. The leader in this industry, Aladin, is currently operating 34 large-scale secondhand bookstores in the country's key cities while the country's largest online bookseller YES24 already has four offline stores in Seoul and Busan, despite its late entry into the secondhand market. These corporate bookstores have systematized buying and selling secondhand books from and to individuals. They are also affecting the profits of bookstores and publishers relying on new book sales as they snap up barely-used latest bestsellers from readers and re-sell them.

Possibility for Change

One existing regulation aims to protect offline bookstores by designating them as businesses appropriate for small to medium sized firms. This regulation for bookstores has been renewed after a three-year term and will be valid until February 2019, limiting the number of new offline bookstores large conglomerates can open. Should this regulation exist temporarily and expire later, large online booksellers will be able to open new stores in the future, bringing about extensive change to the bookstore landscape.

Written by Won-keun Baek (President of Books & Society Research Institute)