The Korea Online Shopping Association (KOLSA) estimates that by December 31, 2005, there were approximately 106,790 direct marketing firms in Korea. Gross revenues for Korean direct marketing from January to December 2005, including catalog sales and TV and Internet shopping, are as follows:

Catalog sales: USD 0.44 billion
TV home shopping: USD 3.53 billion
Internet shopping: USD 6.65 billion
Total: USD 15.30 billion

Direct marketing primarily takes the form of catalog sales, TV home shopping, and Internet shopping. Korea also has a large market for door-to-door sales and multi-level marketing.

Door-to-Door Sales

There were 26,706 door-to-door sales firms in Korea as of December 31, 2005. The major door-to-door sales items include home education materials, books, household consumer goods, cosmetics, health foods, sporting goods, and service products, such as insurance and travel counseling. According to the Korea Direct Selling Association (KDSA), the Korean door-to-door sales market for 2005 totaled USD 6.3 billion.

Multi-level Marketing:

Korea's multi-level sales for 2005 reached USD 3.6 billion. As of December 31, 2005, 128 multi-level marketing (MLM) registered companies employed about 3.1 million active distributors. Over the years, the Korean government has derided MLM as an "undesirable or inappropriate business form" for Korea, claiming that it neglects consumer safety, profits "excessively," and threatens the Korean social fabric through its "pyramid schemes." However, MLM’s negative image in Korea appears to be changing due to the combined efforts of the Korea Direct Selling Association (KDSA) (whose membership includes almost all U.S. MLM companies doing business in Korea), U.S. firms, CS Korea, the U.S. Trade Representative (USTR), and AmCham Korea. KDSA also is a member of the World Federation of Direct Selling Associations in Washington, D.C.

In keeping with its deregulation plan, the Korean government reduced restrictions on MLM companies by passing legislation eliminating most existing market barriers against MLM products, such as the obligation to disclose retail prices on the MLM product label. The authority to oversee the MLM industry rests with the Fair Trade Commission (FTC).

Multi-level marketing activities by U.S. firms in the cosmetics, cleaning products, and kitchenware sectors have been expanding. In order to gain further successes, however, U.S. multi-level sales firms should promote their products and services appropriately and efficiently by carefully analyzing Korean market trends. Prior knowledge of the market conditions can help prevent unnecessary conflicts with government officials, consumer ‘watchdog’ groups, or industry groups.