Chinese direct purchase apps threaten Korean platforms

[Photo by Han Joo-hyung]

South Korea’s online shopping industry is undergoing a significant change as Chinese direct purchase platforms, including AliExpress, aggressively target the Korean market with ultra-low-cost products.

AliExpress now ranks as No. 3 in terms of users among all shopping mall apps in Korea.

According to data from mobile app analytics service Wiseapp Retail Goods on Monday, the number of AliExpress users surged to 6.13 million last month, securing the third position among domestic comprehensive shopping mall apps.

This marks the first time that a Chinese app has reached the top three in the ranking of domestic online malls based on monthly user numbers. Gmarket, in fourth place, had 5.82 million users.

If the current growth trend continues, industry insiders note that it is a matter of time before AliExpress overtakes the second-place 11Street which has 8.16 million users.

As of September, the number of AliExpress mobile app users in Korea was 5.45 million, a 3.6-fold increase from 1.52 million two years ago. The sharp increase of nearly 700,000 in October is believed to be influenced by the consumer attention focused on China’s largest discount event, “Gwanggunje,” also known as Singles’ Day, which fell on November 11.

The presence of other Chinese shopping malls, including Temu and SHEIN, is also rapidly expanding.

Last month, the number of new users for Temu neared 1.72 million, nearly twice that of AliExpress, in terms of new installations on Android and iOS. When combining the monthly users of AliExpress, Temu (2.65 million), and SHEIN (670,000), the total is already 9.46 million, surpassing 11Street by more than one million.

Industry watchers fear that the rise of Chinese direct-to-consumer apps may bring about a significant change in the Korean retail ecosystem, for not only Korean online shopping malls with lower price competitiveness compared to Chinese e-commerce platforms but also supermarkets, stationery, and clothing retailers that source and sell Chinese products.

“Chinese direct-to-consumer apps may hasten the demise of offline retail stores in Korea,” said Seo Yong-koo, a business professor at Sookmyung Women’s University.

Furthermore, there are growing concerns about consumer protection as issues related to Chinese intellectual property infringement, including counterfeit products, continue to surface.