S. Korean ecommerce operators join cutthroat race to check Chinese giant Alibaba and Pinduoduo

By Park Sae-jin Posted : January 16, 2024, 15:19 Updated : January 16, 2024, 15:19
Courtesy of Aliexpress
[Courtesy of Aliexpress]

SEOUL -- South Korean ecommerce operators including Tmon and Wemakeprice have joined a dangerous cutthroat race to check against Chinese online shopping giants Aliexpress, the business-to-customer wing of Alibaba Group, and Temu, the counterpart of Chinese online retail giant Pinduoduo.

Aliexpress became the ecommerce app that gained the largest number of new users in South Korea in 2023, according to data released by Wiseapp, a smartphone app market research firm. Aliexpress garnered an average of about 3.71 million new users every month with more than seven million monthly active users (MAUs) in South Korea during the first three quarters of 2023. Temu, which is also a Chinese ecommerce platform, attracted a monthly average of 3.54 million users. MAU refers to users who actually access a particular service at least once a month.

The culture of "Jikgoo," direct buying in Korean became popular among smart consumers about a decade ago. Some South Korean shoppers mainly use online shopping platforms such as Amazon and eBay to gain access to high-quality and affordable products that are not easily available at home.

Nowadays, more consumers have adopted the Jikgoo culture thanks to the distribution of smartphones. According to the state statistical information service, the amount of Jikgoo imports by individual consumers increased explosively in the third quarter of 2023 to reach 1.6 trillion won ($1.2 billion), up 24.8 percent compared to the same period in 2022. Total Jikgoo imports from China in 3Q 2023 stood at 819.3 billion won, up 106.4 percent year-on-year.

South Korean ecommerce companies Tmon and Wemakeprice aimed to attract South Korean consumers by offering lower prices than their Chinese rivals on apparel and everyday necessities. Tmon is currently offering clothes for as low as 590 won while Wemakeprice opened a new category for products priced under 10,000 won.

The bold move by the South Korean social commerce operators is a desperate move to check Aliexpress and Temu on their turf. Aliexpress, once notorious for its extremely slow shipping, now offers a 7-day shipping service for its popular items. The Chinese ecommerce giant uses fulfillment centers, a logistics center with an integrated warehouse, that store popular items. When customers make an order, the product is shipped from the closest center to the customer.

There are rumors that Aliexpress is planning to open fulfillment centers in South Korea to increase its presence. However, an Aliexpress Korea official told Aju Business Daily that "all possibilities are open," and did not disclose whether the Chinese online shopping giant would establish a bridgehead into South Korea's ecommerce market.
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