South Korean e-commerce platforms show signs of recovery in the face of Chinese competition

SEOUL, July 1 (Korea Bizwire) – South Korean e-commerce platforms appear to be recovering from last year’s intense push from Chinese competitors such as AliExpress and Temu.

The comeback comes as concerns about the safety of cheap Chinese products grow and domestic platforms have launched aggressive promotional campaigns to win back customers.

According to data from app and retail analytics website Wise App for the period from January to May this year, Coupang led with an average of 30,564,130 monthly users. Gmarket and Auction secured second place with 8,280,439 users, closely followed by AliExpress with 8,223,910 users.

Qoo10 subsidiaries Tmon, Wemakeprice and Interpark Shopping ranked fourth with 8,016,651 users, followed by 11Street (7,603,891), Temu (7,204,290) and SSG.com/Emart Mall (3,409,630).

While the overall number of users of national platforms has declined slightly compared to the same period last year, recent trends suggest potential improvement. The only platform to see growth was Coupang, with a 3.8% increase in user numbers. Meanwhile, 11Street saw a decline of 17%, while Gmarket and Auction fell by 16.1%.

These figures paint a bleak picture compared to the meteoric rise of Chinese platforms. AliExpress saw a staggering 110.9% user growth over the same period. Temu, which entered the Korean market in July 2023 with just 816,077 users in August, has grown its user base almost ninefold in less than a year.

However, domestic platforms have shown resilience in recent months. Coupang and Qoo10 subsidiaries have seen steady monthly user growth this year. SSG.com and 11Street have also reversed their downward trends, showing gains since March and April, respectively.

Gmarket and Auction, after declining from January to April, saw growth in May thanks to the “Big Smile Day” shopping festival.

The recovery coincides with a slowdown in growth for AliExpress and Temu. Both platforms peaked in March before falling further in April and May.

Industry insiders attribute this shift to growing consumer disenchantment with Chinese platforms.

“Many consumers who were initially attracted by the very low prices on Chinese e-commerce sites have been disappointed by the quality of the products and the delivery, exchange and refund services,” said one e-commerce industry official.

“Recent reports of carcinogens found in products sold on these platforms have further discouraged consumers.”

Korean platforms have also stepped up their game by offering aggressive promotions. The “Big Smile Day” event organized by Gmarket and Auction offered benefits worth 100 billion won, attracting attention from the industry.

This helped grow its user base by more than 300,000 in May compared with April. 11Street focused on product selection and pricing for its month-long “11-Day Festival,” offering popular home appliances at competitive prices and eye-catching promotions such as “100-won deals on round-trip tickets to Hong Kong.”

Qoo10’s three subsidiaries leveraged their parent company’s global e-commerce infrastructure to offer differentiated products and competitive prices during events such as “All-in Day” at Tmon and “Mega Sale” at Wemakeprice.

Despite these positive signs, challenges remain for Korean e-commerce companies. AliExpress is preparing a counteroffensive, extending its policy of waiving fees for Korean sellers on its “K-Venue” until September and strengthening support for domestic partners.

Meanwhile, Korean platforms, many of which struggle with chronic losses, may struggle to maintain aggressive marketing strategies.

As one industry insider noted: “Although the positions of AliExpress and Temu have been slightly shaken recently, their price advantage remains. Developing strategies that minimize costs while neutralizing the price competitiveness of Chinese e-commerce will be an ongoing challenge for domestic companies throughout the year.”

Ashley Song ([email protected])