It is expected that China will secure the top position in the South Korean cross-border e-commerce, or direct purchase, market, surpassing the United States for the first time this year. This outcome is driven by Chinese e-commerce giants such as AliExpress, which have aggressively penetrated the South Korean direct purchase market by offering low-cost products.
According to the Korea Customs Service on Nov. 5, the total amount of cross-border e-commerce purchases made by South Koreans from the first to the third quarter of this year reached 4.79 trillion won (US$3.65 billion), marking a 20.4 percent increase compared to the same period last year, which was 3.98 trillion won.
By country, China accounted for nearly half with 2.22 trillion won, which is 46.4 percent of the total, while the United States followed behind with 1.39 trillion won, representing 29.1 percent.
In particular, the amount of cross-border e-commerce purchases from China during the first to third quarter of this year, totaling 2.22 trillion won, witnessed a remarkable 106 percent increase compared to the same period last year. This growth is in stark contrast to a 9.7 percent decline in the United States during the same period.
If the current trend continues, it is projected that China will surpass the United States for the first time in history and claim the top spot in the South Korean cross-border e-commerce market for the full year.
The market landscape has completely changed when comparing it to 2014 when cross-border e-commerce purchases from the United States were five times higher than those from China. In 2014, cross-border e-commerce purchases from the United States amounted to 1.2 trillion won, while those from China were 225.78 billion won.
This shift is a result of the rapid growth of e-commerce companies like AliExpress. Entering the South Korean e-commerce market in 2018, AliExpress has quickly gained ground this year by leveraging its “extremely competitive pricing.”
According to the app and retail analysis service “WiseApp Retail Goods,” the number of domestic users of the AliExpress mobile application has surged to 5.45 million as of September this year, which is 3.6 times higher than the number in September 2020, which stood at 1.52 million. It has also increased by over two times compared to September last year when it was at 2.74 million. AliExpress now holds the fourth position, following Coupang with 28.62 million users, 11street with 8.46 million users, and Gmarket with 6.36 million users.
Recently, another Chinese online shopping mall, “Temu,” has made its debut in the South Korean market and is rapidly gaining ground. The number of Temu app users also increased significantly from 520,000 in August to over 1.7 million in September, more than tripling in just one month.