Alibaba’s international arm is spending millions to expand into South Korea

BEIJING – Alibaba, AliExpress’s international e-commerce business is spending the equivalent of $7 million to reach consumers in South Korea, the unit told CNBC in an exclusive interview.

AliExpress said it launched three- to five-day shipping to South Korea last year, allowing South Korean residents to buy some goods, especially fashion, from Taobao. That is Alibaba’s main e-commerce site in China.

In total, the business unit said it spent 10 billion won in South Korea this year to lower the prices of products. The company wants to “make sure we have the best prices,” said Gary Topp, AliExpress’s European marketing and operations director.

The investment seeks to benefit from a market valued in billions of dollars and currently dominated by the US.

Online purchases by South Koreans from foreign retail sites increased by $1 billion in 2021 to $4.5 billion, with 41% from the US, according to an August report by the US International Trade Administration.

“Although the United States ranks number one in 2020, other countries such as China are expanding their presence in the Korean e-commerce market,” the report says, noting that South Korean consumers now shop in more than 30 countries.

From January to September this year, the number of AliExpress app users among South Koreans increased by 22%, Seoul-based independent data analytics company TDI said.

That brought monthly active users in South Korea to a record 2.72 million in September, TDI said.

AliExpress said it does not comment on third-party data.

Gross merchandise volume in South Korea rose 44% last year and the number of buyers grew 50%, Zhang Kaifu, Alibaba vice president and AliExpress general manager, said at a conference in April. The company confirmed the data, which did not include monetary amounts. GMV measures the total value of sales in a given period.

By August last year, AliExpress was already one of the top five sites used by South Koreans to buy products directly from foreign sellers, according to the Korea Consumer Agency, a government agency. The other sites were Amazon, iHerb, eBay and Q0010.

In recent years, AliExpress has mainly focused on reaching the European market. Public disclosures about subsidies focused on making it cheaper and faster for consumers in Spain, France and other European countries to receive packages.

As the company prepares for its big shopping trip in November, the Singles’ Day shopping event leading up to November 11, it said it will offer two-day local delivery to customers in Spain and France. This fall, AliExpress began rolling out interest-free payment plans for customers in Europe.

China’s Overseas E-Commerce Boost

Alibaba’s rivals at home, especially Pinduoduod TikTok owner ByteDance launched this year in the overseas e-commerce race. China-based startup Shein has already made waves in fast fashion with the combination of its local supply chain and overseas social media.