Upcoming Domestic Arrival of ‘1688.com’ with Lower Prices Than AliExpress
The upcoming introduction of Alibaba Group’s B2B shopping platform “1688.com” to the domestic market has raised concerns within the domestic e-commerce industry. The sector is already grappling with the competitive pricing strategies of Chinese direct procurement platforms such as AliExpress and Temu. The potential entry of 1688.com further intensifies worries that domestic businesses may face heightened competition from Chinese enterprises, potentially ceding more ground to them.
According to industry sources on Feb. 4, Alibaba is reportedly planning to launch a Korean-language service for 1688.com, separate from its existing platform AliExpress, possibly as early as this month. Targeting wholesalers, 1688.com is known for selling products at half the regular retail prices, making it even more competitively priced compared to AliExpress and Temu, according to the industry consensus.
When 1688.com starts its service in the domestic market, it is anticipated that “sellers” on open markets such as Naver Shopping, Coupang, Gmarket, and 11Street will face the most significant impact. Many sellers currently source products at lower prices from platforms such as China’s 1688.com and sell them at slightly higher prices on domestic open markets to make a profit. If 1688.com enters the domestic market, it can supply products at prices lower by the same margin as the profits domestic sellers currently earn.
If sellers collapse, open markets are likely to experience a significant blow to their revenues, and ultimately, their business foundations could be shaken. According to the Fair Trade Commission, Naver Shopping, which holds a market share of 42.4 percent in the open market sector as of 2022, records a transaction amount of 35 trillion won (US$26.15 billion). Even Coupang, which mainly engages in direct procurement, has an open market transaction amount reaching 13.1 trillion won.
E-commerce platforms are on edge about the possibility of 1688.com leveraging “extremely low prices” as a strategy for entering the B2C market. A representative from the industry mentioned, “When you explore 1688.com, you may find instances where the minimum order quantity (MOQ) is specified, but there are also cases where it is not. The absence of MOQ essentially means that even regular consumers can make purchases.”
Despite such a situation, the e-commerce industry has not yet come up with a clear strategy to deal with the emerging challenges. An industry representative expressed the difficulty, saying, “Dealing with AliExpress and Temu is already challenging enough; we don’t know how to confront 1688.com,” and added, “The legislation of the Platform Fair Competition Promotion Act, currently being pushed by the Fair Trade Commission, seems to have disarmed the e-commerce industry, leaving it vulnerable on the battlefield.”