The surge of Chinese language e-commerce in South Korea is shedding steam, with AliExpress, the largest of the group, posting a 20% year-over-year drop in gross sales final month, which is its first decline since coming into the market in 2023.
Newest information analyses present that Korean shoppers are shifting away from low-cost choices as frustration mounts over poor product high quality, issues of safety and unreliable customer support.
In keeping with Korea’s various information platform Hankyung Aicel, AliExpress’s estimated bank card transaction worth in October was 91.7 billion gained ($62.8 million), down 19.9% from a yr earlier.
It’s the first decline in Korean gross sales for the platform, operated by China’s Alibaba Group, because it established an area subsidiary in Seoul in August 2023 to drive an aggressive low-price technique.
Its cross-town rivals Temu and Shein have additionally seen development stall within the nation.
Temu’s fee quantity rose 19.4% to 66.9 billion gained in October, effectively beneath the 145% surge seen in January.
Chinese language style retailer Shein, which entered Korea in 2024, peaked at 5.3 billion gained in gross sales in July final yr, with its month-to-month gross sales staying beneath 5 billion gained for 3 consecutive months since.
POOR QUALITY WEIGHS ON DEMAND
Analysts attributed the tepid demand to Korean shoppers’ rising mistrust of product and repair high quality supplied by the Chinese language e-commerce trio, which is eroding their value benefit.
Complaints over faulty or unsafe merchandise have surged.
The state-run Korea Shopper Company dealt with 22,816 cross-border transaction complaints final yr, up 17.5% from 2023, with these involving China or Hong Kong leaping 123%.
One other authorities inspection additionally discovered that 69 out of 558 imported merchandise failed to satisfy security requirements.
In July final yr, Korea’s privateness watchdog even fined AliExpress 2 billion gained for allegedly failing to guard person information, ordering the Chinese language platform to strengthen its privateness safeguards.
“The preliminary buzz round ultra-cheap Chinese language items has pale,” mentioned an government at an area e-commerce firm.
“In lots of circumstances, costs aren’t considerably decrease than these on home platforms like 11Street or Naver Procuring, and buyers disenchanted by high quality are strolling away.”
LOW RETENTION RATES UNDERMINE GROWTH
Consumer loyalty information additionally present how fragile the client base stays in Korea.
Hankyung Aicel information point out that solely 52.6% of AliExpress customers in September returned to make one other buy in October, in contrast with 83.8% for Coupang, Korea’s dominant on-line retailer.
Temu’s buyer retention stood at 50%, whereas Shein’s was simply 18%.
Business officers mentioned the hole stems not solely from considerations over product high quality and security, but additionally from an absence of differentiation in providers akin to quick supply or membership perks.
“Coupang and Naver use subscription perks and in a single day supply to lock in prospects,” mentioned an government at an area e-commerce firm. “AliExpress hasn’t constructed the sort of expertise that retains buyers loyal.”
COUPANG’S UNCHALLENGED LEADERSHIP
Others famous that amid lingering skepticism towards low-cost Chinese language items, fierce competitors from native giants continues to restrict additional growth.
Coupang, as an illustration, countered China’s low-price offensive by buying 22 trillion gained value of Korean-made merchandise final yr, up 5 trillion gained from 2023, to help native suppliers.
Nonetheless, some within the trade warn in opposition to underestimating China’s ambitions, saying that AliExpress’s current tie-up with retail conglomerate Shinsegae might reignite competitors.
In September, Korea’s Truthful Commerce Fee (FTC) permitted the launch of a 50-50 e-commerce three way partnership between Shinsegae Inc. and Alibaba Group, a transfer anticipated to permit their flagship platforms – Gmarket and AliExpress – to leverage one another’s strengths in advertising and marketing and logistics to develop each domestically and overseas.
