Ⅰ. Introduction 1. Ⅱ. Boundaries of Shopping Vanish Shopping Usage Direct Purchases from Foreign Venues 6

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2 Contents Ⅰ. Introduction 1 Ⅱ. Boundaries of Shopping Vanish 2 1. Shopping Usage 2 2. Direct Purchases from Foreign Venues 6 3. Online Used Goods Transactions 10 Ⅲ. Fusion of Online and Offline Shopping, O2O 12 Ⅳ. Convenient Financial Services, FinTech Convenient Payment Services Convenient Remittance Services 21 Ⅴ. Evolving Financial Services, FinTech Crowdfunding Services Internet-Only Bank and other FinTech Services 25

3 Ⅰ. Introduction Population Nationwide Internet users of age ranging 12 through 59 Sample Eligibility Internet users of age ranging 12 through 59 Valid Sample 5,000 survey respondents Survey Method Face-to-face interview through household visits Fieldwork Period Sampling Method Stratified Proportional Allocation Sampling Sampling Error Offline shopping purchase(payment) method ±1.07%p (at the 95% confidence level) Sampling Design Enumeration districts of '2015 Survey on the Internet Usage' was used as the sampling frame. The number and distribution of nationwide internet users by sex, age, and location from the survey were used. 1

4 Ⅱ. Boundaries of Shopping Vanish 1. Shopping Usage A. Usage Rates for Different Shopping Methods Using mobile for shopping rate 62.2%, using PC for shopping rate 57.9% Having 100% Offline shopping among Internet users, 62.2% use Mobile shopping, and 57.9% use PC shopping. While using PC for shopping rate is similar among male (57.0%) and female users (58.9%), using Mobile for shopping rate of female users (67.3%) are more than 10%p higher than that of male users (57.2%). Figure 1 Usage Rates for Different Shopping Methods (Multiple Responses, %) Figure 2 Using Mobile for Shopping Rate by Sex and Age(%) Figure 3 Using PC for Shopping Rate by Sex and Age(%)

5 Ⅱ. Boundaries of Shopping Vanish B. Methods of Information Gathering and Payments for Shopping PC (24.0%) is preferred to Mobile device (21.4%) for gathering information on goods or services Mobile device (9.6%) is preferred to PC (6.6%) as payment method Information on goods and services is gathered mainly through 'Offline' channel (54.6%), and 'PC' (24.0%) and 'Mobile' device (21.4%) followed. 'Offline' channel (83.8%) is also most frequently used for payment, and 'Mobile' device (9.6%) and 'PC' (6.6%) followed. Figure 4 Main Information Gathering and Payment Method for Shopping(%)

6 Ⅱ. Boundaries of Shopping Vanish C. Reasons for Using/Not Using PC The main reason for shopping using PC is No limits on time & space in shopping (80.6%), The biggest reason for not using PC is Preference for seeing goods in person (67.7%) 'Able to shop without time and space constraints' (80.6%) is chosen as the main reason for using PC. Next, other frequently selected reasons are the 'Able to get the useful information (e.g. price comparison, etc.) on diverse products' (68.7%), and 'Able to get the goods at better prices' (53.6%) followed. 'Prefer buying goods after seeing them in person' (67.7%) is the biggest reason for not using PC. Figure 5 Reasons for Using PC in Shopping(Multiple Responses, %)-PC shopping users Able to shop without time and space constraints Able to get the useful information(e.g. price comparison, etc.) on diverse products Able to get the goods at better prices Able to get the goods which cannot be obtained in offline environment Easy pament Able to get special benefits Convenient exchange/refund process Others Figure 6 Reasons for Not using PC in Shopping(Multiple Responses, %)-PC shopping non-users Prefer buying goods after seeing them in person Not familiar with buying goods in online environment Complicated membership joining and payment procedures Fear of worry about a leak of personal information Mobile device use is more convenient Complicated exchange/refund process Cannot wait until the goods are delivered Others 4

7 Ⅱ. Boundaries of Shopping Vanish D. Reasons for Using/Not Using Mobile Device The main reason for shopping using mobile device is No limits on time & space in shopping (81.9%), The biggest reason for not using mobile device is Preference for checking goods in person (64.0%) 'Able to shop without time and space constraints' (81.9%) is chosen as the main reason for using mobile device. Next other frequently selected reasons are the 'Able to get the useful information (e.g. price comparison, etc.) on diverse products' (58.6%), and 'Able to get the goods at better prices' (40.8%). 'Prefer buying goods after seeing them in person' (64.0%) is the biggest reason for not using mobile device, similar to using PC. Figure 7 Reasons for Using Mobile Device in Shopping(Multiple Responses, %)-Mobile shopping users Able to shop without time and space constraints Able to get the useful information(e.g. price comparison, etc.) on diverse products Able to get the goods at better prices More convenient than shopping through the personal computer Able to get the goods which cannot be obtained in offline environment Easy pament Able to get special benefits Convenient exchange/refund process Others Figure 8 Reasons for Not using Mobile Device in Shopping(Multiple Responses, %)-Mobile shopping non-users Prefer buying goods after seeing them in person Not familiar with buying goods using mobile service Shopping through personal computer is more convenient The web page display is too small Fear of worry about a leak of personal information Complicated membership joining and payment procedures Concerning about a leak of my financial information Others 5

8 Ⅱ. Boundaries of Shopping Vanish 2. Direct Purchases from Foreign Venues A. Forms of Direct Purchases from Foreign Venues Foreign Direct Purchase Usage Rate 13.8% 13.8% of the online shopping users make purchases directly from foreign venues. Meanwhile, the detailed survey on forms of direct purchases from foreign venues shows that most users choose 'Direct shipment from foreign venues' (57.3%), followed by 'Foreign purchase agent service' (38.1%), and 'Foreign shipment agent service' (33.0%). Figure 9 Foreign Direct Purchase Usage Rate and Forms of Direct Purchases from Foreign Venues(Multiple Responses, %)

9 Ⅱ. Boundaries of Shopping Vanish B. Products Purchased Directly from Foreign Venues Mainly purchased products are Clothes (61.1%) and Miscellaneous goods (60.1%) Main products directly purchased from foreign venues are 'Clothes' (61.1%) and 'Miscellaneous goods' (60.1%), followed by 'Cosmetics' (20.6%), 'Health supplements' (13.2%), 'Food' (10.7%), 'Books, music, DVDs' (9.5%), 'Hobby/stationary goods' (8.7%), 'Baby goods' (7.5%), and 'Sports/leisure items' (6.9%), etc. Figure 10 Products Purchased Directly from Foreign Venues(Multiple Responses, %)-Foreign Direct Purchase Users

10 Ⅱ. Boundaries of Shopping Vanish C. Payment Methods for Direct Purchase from Foreign Venues Main Payment Method for Direct Purchase from Foreign Venues is Credit Card (77.3%) 'Credit card' (77.3%) is most frequently used as payment method for direct purchase from foreign venues, followed by 'Check card(or debit card)' (22.9%), 'Account transfer(internet banking, mobile banking)' (12.6%), and 'Overseas payment service' (3.2%). Figure 11 Payment Methods for Direct Purchase from Foreign Venues(Multiple Responses, %)-Foreign Direct Purchase Users 77.3 Credit cards 22.9 Check card(or debit card) 12.6 Account transfer(internet banking, mobile banking) 3.2 Overseas payment service D. Reasons for Making Direct Purchases from Foreign Venues The main reason for direct purchase from foreign venues is Cheaper than domestic venues (80.2%) 'Cheaper than purchasing from domestic venues' is the most frequently chosen reason for direct purchase from foreign venues. Following reasons are 'More diverse products than domestic market' (68.2%), 'Better quality than domestic products' (59.9%), and 'Able to get the goods that won t be obtained in Korea' (57.1%). Figure 12 Reasons for Making Direct Purchases from Foreign Venues(More than three Responses, %) -Foreign Direct Purchase Users 8

11 Ⅱ. Boundaries of Shopping Vanish E. Satisfaction Rate for Direct Purchase from Foreign Venues Overall Satisfaction Rate for Direct Purchase from Foreign Venues: 76.3% 'Quality of the product' (89.1%) is the aspect of foreign direct purchase with the highest satisfaction rate. Following aspects are 'Product diversity' (80.1%), 'Product price' (73.3%), 'Payment convenience' (69.1%), and 'Convenience of using the website' (67.8%), whereas 'AS(After Service)' (25.9%) shows relatively low satisfaction rate. Figure 13 Satisfaction Rate for Direct Purchase from Foreign Venues(%)-Foreign Direct Purchase Users no experience very unsatisfactory somewhat unsatisfactory neutral somewhat satisfactory very satisfactory Overall satisfaction Quality of the product Product diversity Product price Payment convenience Convenience of using the website Safety of delivery Quickness of delivery After Service

12 Ⅱ. Boundaries of Shopping Vanish 3. Online Used Goods Transactions A. Online Used Goods Transaction Experience 6.7% have experienced online used goods transactions Among Internet shoppers, 93.3% of them have no experience of online used goods transaction. On the other hand, 6.7% answered that they have experience of online used goods transaction. Figure 14 Online Used Goods Transactions Experience(Multiple Responses, %) B. Used Goods in Online Transactions 'Clothes and miscellaneous goods' (46.8%) are most purchased item via online used goods transactions 'Clothes and miscellaneous goods' (46.8%) takes the biggest proportion in online used goods transactions, and 'Digital/electronic goods' (31.2%), 'Book/music/DVD' (26.4%), 'Sports/leisure items' (14.1%), and 'Baby goods' (12.3%) on the list. Figure 15 Used Goods in Online Transactions(Multiple Responses, %)-Online used goods transactions users 10

13 Ⅱ. Boundaries of Shopping Vanish C. Mainly Used Payment Method of Online Transactions for Used Goods Mainly Used Payment Method of Online Transactions for Used Goods: 'Account transfer' (63.7%) For online used goods transactions, 63.7% of the users make payment through 'Account transfer', followed by 'Cash(meet in person)' (25.5%) and 'Safe transaction website' (10.8%). Figure 16 Mainly Used Payment Method of Online Transactions for Used Goods(%)-Online used goods transactions users D. Preferred Delivery Method of Online Transactions for Used Goods Most Preferred Delivery Method of Online Transactions for Used Goods: 'Direct delivery' (52.3%) 'Direct trading' (52.3%) is the most preferred delivery method for used goods transactions online. Following method is 'Via delivery service' (46.2%). Figure 17 Preferred Delivery Method of Online Transactions for Used Goods(%)-Online used goods transactions users 11

14 Ⅲ. Fusion of Online and Offline Shopping, O2O A. O2O Services Awareness Rate 8 out of 10 Internet Users (84.0%) are aware of O2O Services 84.0% of the Internet users are aware of O2O(online to offline) services. In detail, 'Food(delivery)' (76.6%) is best known, followed by 'Taxi' (63.1%), 'Accommodations' (44.8%), 'Real Estate' (31.9%), 'Home Sharing' (17.2%), 'Car Sharing' (13.1%), 'Health and Medicine' (12.6%), 'Life' (12.2%), 'Used car' (8.1%), and 'Space Sharing' (6.2%). Figure 18 O2O Services Awareness Rate(Multiple Responses, %)

15 Ⅲ. Fusion of Online and Offline Shopping, O2O B. Experience of Using O2O Services 46.4% have experience of using O2O services With 46.4% of the respondents having experienced O2O services, 'Food(delivery)' (31.5%) and 'Taxi' (27.2%) are used most. Other O2O experiences involve 'General' related to hypermarket & department store goods and books (10.6%), 'Accommodations' (8.5%), 'General' related to food and beverage in cafe (5.6%), fashion-related 'General' (2.6%), 'Real Estate' (1.9%), and 'Life' (1.4%). Figure 19 Experience of Using O2O Services(Multiple Responses, %)

16 Ⅲ. Fusion of Online and Offline Shopping, O2O C. Reasons for Using/Not Using O2O Services The main reason for using O2O services is 'Faster and more convenient' (61.1%), The biggest reason for not using O2O services is 'Familiar with the conventional system' (60.3%) 'Faster and more convenient than the conventional service' is the most-selected reason for using O2O services, chosen by 61.1% of the respondents. Following reasons are 'Recommended by acquaintance' (46.9%) and 'Able to get the wanted service immediately' (45.4%) followed. The respondents mainly chose 'Familiar with the conventional system' (60.3%) as the reason for not using O2O services. Figure 20 Reasons for Using O2O Services(Multiple Responses, %)-O2O Services Users Faster and more convenient than the conventional service Recommended by acquaintance Able to get the wanted service immediately Cheap due to special discount or promotion Got interested after seeing the adds(tv commercial, offline ads, etc.) Able to exchange information(e.g., users reviews, distributor, etc.) Able to get the information on offline stores and services in realtime Figure 21 Reasons for Not Using O2O Services(Multiple Responses, %)-O2O Services non-users Familiar with the conventional system Unnecessary Concern about a leak of personal information Unwilling to go through installation and membership joining processes Don t know how to use Hard to make a choice due to too many options O2O service is not available in my current service Limited stores to use Others 14

17 Ⅲ. Fusion of Online and Offline Shopping, O2O D. Willingness to Use O2O Services Willingness to Use O2O Services 69.5% 69.5% of the respondents are willing to use O2O services in the future. In detail, 'Food(delivery)' (53.6%) is chosen the most, followed by 'Taxi' (37.2%), 'Accommodations' (26.0%), 'General' related to hypermarket & department store goods and books (24.6%), 'Real Estate' (13.8%), 'General' related to food and beverage in cafe (13.3%), 'Life' (11.4%), and 'Health and Medicine' (10.6%). Figure 22 Willingness to Use O2O Services(Multiple Responses, %)-O2O Services Users

18 Ⅳ. Convenient Financial Services, FinTech 1. Convenient Payment Services A. Convenient Payment Services Awareness More than half of the Internet users (61.9%) are aware of Convenient Payment Services 61.9% of the Internet users are 'Aware' of convenient payment services, whereas 38.1% answered 'Unaware'. Figure 23 Convenient Payment Services Awareness(%) 16

19 Ⅳ. Convenient Financial Services, FinTech B. Experience of Using Convenient Payment Services 21.3% have used Convenient Payment Services 21.3% of the respondents answered that they have used convenient payment services, whereas 78.7% answered that they have no experience. Figure 24 Experience of Using Convenient Payment Services(%) C. Experience of Using Convenient Payment Services(in Detail) The Most Frequently Used Convenient Payment Services is Financial institutions (75.1%) 'Financial institutions' such as 'Shinhan App Card' and 'Samsung Card M Pocket' are the most frequently used Convenient Payment Services, as chosen by 75.1% of the respondents. Following services are 'Internet service providers' (27.4%) such as Naver Pay, 'Social platforms' (19.1%) such as Kakao Pay, and 'Social commerce' (18.4%) such as Tmon Pay. Figure 25 Experience of Using Convenient Payment Service(in Detail)(Multiple Responses, %) -Convenient payment services users 17

20 Ⅳ. Convenient Financial Services, FinTech D. Reasons for Using/Not Using Convenient Payment Services Quick payment process (75.2%) is the main reason for using convenient payment services, Accustomed to conventional method (48.0%) is the biggest reason for not using convenient payment services 'Quick payment process(e.g. information input, authentication, etc.)' is most chosen, 75.2%, as the reason for using convenient payment services. Following reason is 'Simple payment(no additional installation of programs such as Active X)' (58.8%). 'Too familiar with the conventional method' (48.0%) is main reason for not using convenient payment service. Figure 26 Reasons for Using Convenient Payment Services(Multiple Responses, %)-Convenient payment services users Quick payment process(e.g., information input, authentication, etc.) Simple payment(no additional installation of programs such as Active X) Many benefits Connected as a means of payment with diverse shopping malls Recommended by acquaintances Interest in new financial services Figure 27 Reasons for Not Using Convenient Payment Services(%)-Convenient payment services non-users Too familiar with the conventional method Unnecessary Have no idea about the service Complicated usage(app installation, card registration, etc.) Doubt on new financial services Hard to select(too many simple payment options) Not enough stores to use Others 18

21 Ⅳ. Convenient Financial Services, FinTech E. Change in Shopping Behavior and Awareness After Starting to Use Convenient Payment Services The biggest change after starting to use convenient payment services is 'Simple and fast payment process' (78.0%). The biggest change after starting to use convenient payment services is a positive change in the awareness that a 'Simple and fast payment process' (78.0%). Meanwhile, more than half of the respondents revealed a negative change in the awareness by choosing 'More concern about a leak of my financial information' (63.0%). Meanwhile, 'Increased in shopping frequency' (38.5%), and 'Increase in shopping amount' (36.8%) show low level of change in behaviors. Figure 28 Change in Shopping Behavior and Awareness After Starting to Use Convenient Payment Services(%) -Convenient payment services users storongly disagree disagree no change agree strongly agree Simple and fast payment process More concern about a leak of my financial information Change in my main shopping channel(e.g., Shopping through personal computer -> mobile shopping) Change in the main means of payment Increase in shopping frequency Increase in shopping amount

22 Ⅳ. Convenient Financial Services, FinTech F. Willingness to Use Convenient Payment Services 35.2%: Willing to Use Convenient Payment Services 35.2% of the respondents have intention to use convenient payment services in the future, whereas 64.8% have no intention to use. Figure 29 Willingness to Use Convenient Payment Services(%) 20

23 Ⅳ. Convenient Financial Services, FinTech 2. Convenient Remittance Services A. Convenient Remittance Services Awareness 4 out of 10 Internet users (39.3%) are aware of Convenient Remittance Services 39.3% of the Internet users are 'Aware' of convenient remittance services, whereas 60.7% answered 'Unaware'. Figure 30 Convenient Remittance Service Awareness(%) B. Experience of Using Convenient Remittance Services Experience of Using Convenient Remittance Services 6.0% 6.0% of the respondents have used convenient remittance services, whereas 94.0% have no experience of the service. Figure 31 Experience of Using Convenient Remittance Services(%) 21

24 Ⅳ. Convenient Financial Services, FinTech C. Reasons for Using/Not Using Convenient Remittance Service Quicker and Easier (68.3%) is the main reason for using Convenient Remittance Services, Current services are enough (40.5%) is the biggest reason for not using Convenient Remittance Services 68.3% of the respondents used convenient remittance services because they are 'Simpler and more convenient compared to the conventional online remittance'. Following reason is 'Lower fee' (21.3%). 'The current banking services are enough' (40.5%) is the biggest reason for not using convenient remittance services. Figure 32 Reasons for Using Convenient Remittance Service(%)-Convenient remittance services users 68.3 Simpler and more convenient compared to the conventional online remittance(the Internet banking) 21.3 Lower fee Recommended by acquaintances Various functions(e.g., divided remittance, etc.) Interest in new financial services Figure 33 Reasons for Not Using Convenient Remittance Service(%)-Convenient remittance services non-users The current banking services(e.g., the Internet banking, etc.) are enough Have no idea about the service Unnecessary Concern about a leak of personal information and security breach Complicated usage(app installation, card registration, etc.) Doubt on new financial services(e.g., a matter of compensation in the event of an illegal transaction, etc.) There is a remittance ceiling Not sure about solutions on e-finance fraud Don t know how to use the service 22

25 Ⅳ. Convenient Financial Services, FinTech D. Willingness to Use Convenient Remittance Services 21.1%: Willing to use Convenient Remittance Services 21.1% of the respondents are willing to use convenient remittance services, whereas 78.9% have no intention to use. Figure 34 Willingness to Use Convenient Remittance Service(%) 23

26 Ⅴ. Evolving Financial Services, FinTech 1. Crowdfunding Services A. Crowdfunding Services Awareness/Experience/Willingness to Use Crowdfunding: 14.5% are aware, 0.9% have experience of using, 7.3% are willing to use 14.5% of the Internet users are 'Aware' of Crowdfunding services, while 0.9% have experience of using it, and 7.3% are willing to use the services. Figure 35 Crowdfunding Services Awareness/Experience/Willingness to Use(%)

27 Ⅴ. Evolving Financial Services, FinTech 2. Internet-Only Bank and other FinTech Services A. Internet-Only Bank and others Awareness/Experience/Willingness to Use Internet-Only Bank: Awareness 24.1%, Willing to Use 15.6% Online Insurance Supermarket: Awareness 22.8%, Experience 1.3%, Willing to Use 16.1% Fund Supermarket: Awareness 9.0%, Experience 0.1%, Willing to Use 6.5% 24.1% of the Internet users are 'Aware' of Internet-Only Bank, 15.6% are willing to use the service in the future. 22.8% are 'Aware' of Online Insurance Supermarket, and 1.3% have experience of using the service; 16.1% are willing to use the service in the future. 9.0% are 'Aware' of Fund Supermarket; 0.1% have used it, and 6.5% are willing to use the services in the future. Figure 36 Internet-Only Bank and other FinTech Services Awareness/Experience/Willingness to Use(%)

28 Ⅴ. Evolving Financial Services, FinTech B. Reasons for Willingness/Unwillingness to Use Internet-Only Bank Main Reason for Willingness to Use Internet-Only Bank: Available 24/7 (25.7%) The biggest Reason for the Lack of Willingness: Conventional bank services are enough (42.2%) Main reasons chosen for the willingness to use Internet-Only Bank are that they are 'Able to use the service 24 hours a day and 365 days a year' (25.7%) and that 'Able to open an online bank account in non-face-to-face' (22.9%). 'Conventional bank services are enough' is chosen by most respondents, 42.2%, as the reason for their unwillingness to use internet-only bank. Figure 37 Reasons for Willingness to Use Internet-Only Bank(%)-Those who are intend to use Internet-Only Bank Able to use the service 24 hours a day and 365 days a year Able to open an online bank account in non-face-to-face More advantageous than regular banks in terms of regular deposit, time deposit and loan interest rate Able to utilize diverse financial products Diverse additional(allied) services in addition to withdrawal and deposit Able to save time(waiting time, moving time, etc.) Interest in new financial services Safe system with high-level electronic financial security Figure 38 Reasons for Unwillingness to Use Internet-Only Bank(%)-Those who are not intend to use Internet-Only Bank Conventional bank services(e.g., the Internet banking) are enough The face-to-face system is more reliable Unnecessary Concern about a leak of personal information and security breach There might be a lack of expertise on financial services Not sure of the solutions such as a solution against e-finance fraud Not familiar with electronic financial transactions Complicated procedures 26