South Korean e-commerce platform blocks AliExpress flow across borders

Actor Don Lee, AliExpress Korea brand ambassador [ALIEXPRESS KOREA]

[NEWS ANALYSIS]
As AliExpress establishes itself as South Korea's second-largest e-commerce platform, domestic players are doing everything they can to stop sellers from migrating to China's newest platform.
While Korean e-commerce giants such as Coupang, 11Street, and Gmarket typically charge commissions of 10 to 20 percent, AliExpress attracts Korean sellers with its zero-commission policy.

Top 5 domestic e-commerce platforms [AHN DA-YOUNG]

As a result, the most popular online shopping apps among Koreans in February were Coupang, AliExpress, 11Street, and TMON. Coupang's monthly active users increased by 570,000 year-on-year, while AliExpress's user count increased significantly to his 4.63 million, indicating rapid growth.
In response to AliExpress's aggressive recruitment of K-sellers, Korean e-commerce companies Prevent intrusion. Companies like Coupang and new entrant Interpark Shopping+ are ramping up cross-border shipping capabilities, while 11Street focuses on open market sellers, among other incentives aimed at attracting and retaining sellers. The company launched its first-ever fulfillment service.

Interpark Commerce launched its global shopping service “Interpark Shopping'' on March 25th. [INTERPARK COMMERCE]

Cross-border shipping
Domestic e-commerce platforms are venturing into cross-border shipping to tap the international market. The move is seen as a dual effort to support small and medium-sized enterprises while strengthening its influence in global markets and stemming the flow of sellers to Chinese e-commerce platforms.
Interpark Commerce, in collaboration with parent company Qoo10, announced Interpark Shopping+, a new global shopping platform. The platform will enable sellers to reach consumers across his Qoo10 network spanning Japan, the US, Singapore, India and China. Sellers listing their products on Interpark Shopping+ gain visibility on Qoo10's international platform, supported by an automatic translation system for seamless communication with international customers. Meanwhile, domestic consumers can also access and purchase products from abroad.
“Interpark Shopping+ provides consumers with the convenience of browsing and purchasing products from Qoo10's global channels, while also helping sellers streamline the complexity of international sales and expand international markets to reflect the ease of domestic shipping. “We will be able to expand seamlessly into the future,” a company spokesperson said.

Coupang delivery truck [YONHAP]

Coupang has expanded its overseas direct purchasing service to Japan, in addition to the existing US, China, and Hong Kong. With the addition of Japan to the service, Coupang customers can now purchase not only Japanese food brands such as Nissin and Meiji, but also homeware and beauty brands such as Senka, Biore and Tsubaki. Additionally, members of the platform's paid WOW membership program enjoy the added benefit of free shipping.
Singapore-based Qoo10, which owns several Korean e-commerce platforms, recently acquired North American global shopping platform Wish for 230 billion won ($171 million). This acquisition demonstrates Qoo10's commitment to strengthening its cross-border commerce capabilities. The company, along with its subsidiaries TMON, WeMakePrice, and Interpark Commerce, plans to use Wish as a primary means of selling Korean products.
“For e-commerce platforms that need to gather a wide range of high-quality sellers, intense competition is inevitable,” said an official at an e-commerce business. “Cross-border marketplaces not only offer small business owners the opportunity to expand their reach, but also allow platforms to diversify their sales channels.”

11Street's “Shooting Seller” service is a fulfillment service that handles logistics processes such as storage, packaging, shipping, inventory management, returns and exchanges for online sales, and was launched on March 20th. [11STREET]

faster delivery
Some domestic e-commerce players are rolling out their own customized fulfillment solutions. This comes after AliExpress announced plans to open a fulfillment center in South Korea by the end of the year, in addition to waiving fees.
Alibaba Group, the parent company of AliExpress, announced plans to invest $200 million to establish its first Korean logistics center. Details have not yet been disclosed, but industry insiders speculate that AliExpress will choose to lease existing domestic warehouses to accommodate local sellers. This measure is expected to significantly reduce delivery times from currently taking as little as five days to as long as four weeks to just one or two days.
11Street has launched a comprehensive logistics service that provides end-to-end solutions from product storage and packaging to delivery, exchange, and returns. Sellers simply send their products to his 11Street logistics hub in Incheon, and the company manages every aspect of the logistics process. 11Street is also expanding its services to include orders from other e-commerce platforms.
“As the range of sales platforms expands, demand for streamlining logistics operations is increasing,'' said an 11 Street official. “These initiatives give merchants a competitive edge in terms of speedy delivery and cost efficiency, while customers benefit from expanded next-day delivery services.”
Similarly, Gmarket has expanded its next-day delivery service to include fresh produce.

Ray Chang, general manager of AliExpress Korea, announced a 10 billion won ($7.6 million) investment plan to combat counterfeit goods at a press conference in central Seoul on December 6. [ALIEXPRESS KOREA]

K shopping mall closure record
The surge of Chinese e-commerce giants last year led to a record number of closures of online shopping malls in the country, particularly affecting small and medium-sized businesses in the consumer goods sector.
According to mobile market research firm WiseUp Retail Goods, AliExpress had a user base of 8.18 million people last month, slightly ahead of 11 Street's 7.36 million users, ranking it among Korean online shopping platforms in terms of monthly active users. It came in second place behind Coupang. Along with AliExpress, Temu also surged to fourth place with 5.81 million users.
G Market, which was acquired by Shinsegae Group in 2021 for 3.5 trillion won, posted a deficit for two consecutive years from 2022 to 2023. SSG.com, also under Shinsegae, restarted as a corporation in 2019 with an investment of 1 trillion won, but it has not yet become profitable.
11 Street, which secured 500 billion won in investment in 2018, is now forced to go through the sale process and find a new owner after its initial public offering failed amid mounting losses.
Many small business owners in the domestic e-commerce open market face additional challenges as a significant number of them are engaged in buying and selling various consumer goods such as household goods and clothing imported from China. ing.
This is proven by data. The number of online retail business closures in South Korea reached a record high of 78,580 last year, an increase of 37.3 percent year-on-year, according to data from the Ministry of Public Safety. By February of this year, the number of store closures had already increased by 29.3% compared to the same period last year, suggesting that last year's numbers could be surpassed.

AliExpress's “100 Billion Festa” sale starts on March 18th to commemorate its founding anniversary and includes limited-time offers of ultra-low prices and random discount coupons. [SCREEN CAPTURE]

Domestic companies have raised concerns about discrimination favoring Chinese platforms, citing various examples of sanctions evasion, such as lack of product safety inspections such as KC certification and duty exemptions.
One seller said, “Items purchased on AliExpress that cost less than $150 will not be subject to customs duty, but domestic sellers will incur additional costs for customs clearance and certification.” “We cannot match the lowest price set.”
Experts emphasized the need for policy changes to support national platforms rather than impose regulations.
“As Chinese e-commerce takes advantage of the market's already saturated growth and makes inroads, the threat to domestic companies in South Korea's online shopping space is increasing,” Jeong Yong-sung, a business management professor at Dankuk University, said at a recent seminar. ”
“Regulation could backfire on us,” he said. “Instead of regulating domestic platforms, we should shift the policy paradigm by providing support. At the government level, we should support small and medium-sized enterprises and ensure that consumer data does not go to China by locating servers in South Korea. In order to do so, it is essential to introduce an overseas sales agent center. ”

Written by Seo Ji-eun [seo.jieun1@joongang.co.kr]