Alibaba’s international service, AliExpress, has been attracting Korean brands with a ‘zero commission’ policy, potentially disrupting the domestic e-commerce market dominated by Coupang and Naver Shopping.
According to the retail industry on Jan. 30, AliExpress is waiving commission fees for Korean brand products in its K-Venue section until the end of March, encouraging more Korean companies to join and sell their products.
Manufacturers typically pay 10-20% of sales as commission fees to open market platforms like AliExpress. Eliminating these fees effectively increases their profit margin by 10-20%. Suppliers are responsible for the cost of shipping within three days, and despite the potential for reduced margins and lower prices, they have not done so, fearing friction with domestic e-commerce companies like Coupang.
Since launching K-Venue in October last year, AliExpress has rapidly increased its user base. According to data provider WiseApp, AliExpress’s monthly users jumped from about 3 million at the beginning of the year to over 6 million in October and approximately 7.13 million in December, closely approaching the second-ranked 11st with 7.68 million users.
The distribution industry attributes this growth to the expansion of product variety with Korean brands, attracting not only young consumers but also middle-aged and older age groups. Chinese products, being ultra-cheap and of lower quality, had limitations in growing the user base due to long delivery times.
Separately, Alibaba is preparing a Korean service for 1688.com, a China-based B2B service connecting manufacturers and wholesalers. Its main advantage is offering products at about half the retail price, offering significant price competitiveness even compared to other low-cost platforms like AliExpress and Tmall.
Korean retailers are concerned that the entry of 1688.com into Korea might be more disruptive than AliExpress and Tmall. There is a possibility that sellers on Coupang, Gmarket, and 11st could get caught in the Alibaba ecosystem by buying in bulk from 1688.com and selling on AliExpress. Observations suggest that 1688.com may start selling not only to wholesalers but also to retailers. An e-commerce industry representative expressed concern, saying, “From B2B to connecting sellers and consumers in C2C, Alibaba seems intent on gradually taking over the entire domestic distribution market.”