Yongsan bitten by the hand that feeds it

Once called a mecca for electronics products, Yongsan Electronics Market is in a financial slump due to, well, electronics ― competition from online vendors is diverting the cash flow at Seoul’s gizmo megaplex. On the second floor of the market is a typical long corridor filled with shops and electronic gadgets of every kind. Clerks say to passing customers, “Just ask us what you’re looking for and we’ll find it for you.” Although not allowed to harass shoppers, some clerks still tug at the sleeves of browsing shoppers. Kim Jong-tae, an official at Yongsan, said about 20 percent of merchandisers have left the huge market. “A lot of the merchandisers have left the market altogether because of the depression,” he said. “You can see empty offices in the terminal arcade. There are about 25 of them now,” said Mr. Kim. “The nearby arcades have been competing to lower rent prices, so beginning this year, we lowered our rent prices by about 30 percent as well.” Baek Jeong-hwa, a shopper wandering around Yongsan recently, said Yongsan no longer has a competitive edge. “I think buying electronic goods online now is much cheaper than getting them at Yongsan,” she said. “I was going to buy something if I saw something that I really wanted, but now that I’m actually here, I’m reconsidering, because I know I can probably find a cheaper one online.” With growing numbers of people using the Internet for shopping, Yongsan is not the only offline big-box market to experience declining customers. But Yongsan has taken a big hit. It was famous for providing products without the middleman and thereby saving shoppers money. Now the Internet has taken over some of that role. Also, with Web sites like Danawa and Enuri, consumers already know the price of most electronics products, even those that haven’t yet made their way into Korea. Before, vendors at Yongsan were considered industry experts because they had exclusive inside information on raw costs and suppliers. But today all that information is out in the open. “Before, when we assembled a PC, we could make a margin of about 100,000 won ($104) per PC, but these days, we only make about 15,000 to 30,000 won per unit,” said a president of a PC assembly company. Because of shifts in consumption patterns, companies are doing their best to keep up with the high speed changes brought about by the information superhighway. Computer parts seller CompuZone, with stores in Seonin Town and Electronics Town, runs an online shop in addition to its offline shops. It began utilizing the online market in 1998 and now the online sector generates sales of up to 6 billion won a month. “About 1,000 electronic transactions take place each day,” said Lim Han-seok, a Seonin spokesman. “We also offer a text-messaging service that informs the sender when the package will be delivered. Our subscribers are divided into gold and platinum memberships.” Computer accessories company Joyzen is now developing online content. Its site features a product review page, which has been getting good feedback. “When people write reviews on how bad a product was, our image may suffer since we sold it. And it sends a warning to the company that manufactured it,” said Kim Sang-chel, a spokesman for Joyzen. The company also operates an online photo gallery and an Internet community with 30,000 members, which it uses to coordinate events with affiliated companies. by Shim Jae-woo, Wohn Dong-hee