AliExpress, the international e-commerce division of Alibaba, would spend the equivalent of $7 million to reach South Korean customers, according to an exclusive interview with CNBC.
Last year, AliExpress announced the debut of three- to five-day delivery to South Korea, enabling South Korean citizens to purchase select goods, particularly fashion items, via Taobao. This is Alibaba’s principal e-commerce platform in China.
The business segment reported spending 10 billion won in South Korea this year to reduce product pricing. Gary Topp, European commercial and marketing director of AliExpress, said that the firm aims to “ensure we have the best price.”
The investment aims to penetrate a multibillion-dollar sector now controlled by the United States.
According to a study published in August by the U.S. Commerce Department, South Koreans’ online purchases from foreign retail sites climbed by $1 billion to $4.5 billion in 2021, with 41% coming from the United States International Trade Administration.
“Although the United States was rated first in 2020, other countries such as China are extending their position in the Korean e-commerce business,” the survey said, adding that South Korean customers currently purchase from more than 30 nations.
From January to September of this year, the number of South Koreans using the AliExpress app climbed by 22%, according to Seoul-based data analytics firm TDI.
In September, the number of monthly active users in South Korea reached a new high of 2.72 million, according to TDI.
AliExpress said that it would not comment on third-party information.
Zhang Kaifu, vice president of Alibaba and general manager of AliExpress, said in April at a conference that the gross merchandise volume in South Korea climbed by 44% last year, while the number of purchasers expanded by 50%. The corporation validated the information, which lacked monetary values. GMV estimates the total value of sales over a certain time period.
According to the Korea Consumer Agency, AliExpress was one of the top five sites used by South Koreans to purchase items directly from foreign merchants as of August of last year. The remaining websites included Amazon, iHerb, eBay, and Q0010.
In previous years, AliExpress largely targeted the European market. The emphasis of public disclosures on subsidies was on making it less expensive and quicker for customers in Spain, France, and other European nations to get shipments.
As the firm prepared for its November shopping festival — the Singles Day shopping extravaganza building up to November 11 — it announced that clients in Spain and France would get two-day local delivery. This autumn, AliExpress started offering clients throughout Europe interest-free instalment payment arrangements.
This year, Alibaba’s domestic competitors, including Pinduoduo and ByteDance, the owner of TikTok, entered the international e-commerce competition. Shein, a Chinese company, has already created ripples in the fast fashion industry by combining its domestic supply chain with international social media.
AliExpress, which debuted in 2010, refused to comment on its rivals.
Alibaba reported that revenue from its international commerce retail business fell 3% year-over-year to $1.57 billion during the quarter ending June 30. This decline was primarily attributable to challenges in the European market, such as the depreciation of the euro against the U.S. dollar and new EU tax rules.
The company’s China retail commerce division had a 2% year-over-year fall to $20.45 billion during the same period. The time was marred by logistical and supply chain delays caused by Covid.