The Chinese Sellers Riding the Rocket
The invasion of the domestic market by Chinese e-commerce platforms, represented by AliExpress and Temu, is showing a level of disruptive power beyond predictions. Our investigation found that sellers sourcing products from China and selling them domestically, whether through purchasing agents or direct buying, have been negatively impacted in terms of sales.
Against this backdrop, government agencies such as the Korea Customs Service, the Ministry of Trade, Industry and Energy, and the Korea Post have been closely monitoring the spread of Chinese e-commerce platforms, preparing countermeasures to protect domestic industries and address the distribution of counterfeit products. They have reached out to us for information sharing as well.
However, sellers' concerns are not limited to the expansion of Chinese platforms in Korea. Korean e-commerce platforms like Coupang and Gmarket are also expanding their product categories by directly introducing Chinese sellers to compete against Chinese e-commerce platforms. Sellers must now be mindful of competition not only from Chinese platforms but also from Chinese sellers within Korean platforms.
In particular, Coupang is not just allowing Chinese sellers to join its platform. It is actively promoting a full-fledged fulfillment service, Coupang Global Fulfilment (CGF), which provides fast international logistics services to Chinese sellers and even manages their inventory in Korean warehouses. This service could overcome the major limitation of Chinese sellers - shipping speed. If Chinese sellers get on board with Coupang's fulfillment service, it means they can match or exceed the shipping speed of domestic Korean sellers. Thus, Korean sellers now face competition not only from AliExpress and Temu but also from Chinese sellers on Coupang's platform. Given that there are no e-commerce logistics services surpassing Coupang in Korea at the moment, the worries of Korean sellers are intensifying.
Why Can't We Use Platforms for Global Expansion?
As the domestic e-commerce market faces a double whammy of growth slowdown and direct penetration by Chinese platforms and sellers, sellers' response paradoxically lies in global exploration. The rising popularity of Korean products, fueled by the Korean Wave, suggests an opportunity for market expansion abroad. Korean e-commerce platforms play a role in this too.
For instance, while Coupang is ironically a gateway for Chinese products, it also serves as a channel for Korean sellers to venture overseas, albeit its global influence is currently limited to Taiwan. Coupang indirectly supports Korean sellers' international expansion by handling logistics, customs, local delivery, and customer service for products sold in Taiwan through its Rocket Delivery service.
Qoo10, merged with TMON, Wemakeprice, and Interpark Commerce, is intensifying its strategy for global expansion, especially after acquiring Wish. A representative from Qxpress, Qoo10's logistics subsidiary, mentioned that Qxpress has completed system integration allowing sellers from Qoo10, TMON, Wemakeprice, and Interpark Commerce to manage products and request logistics services seamlessly across platforms, optimizing for one-click sales to China, Japan, and Southeast Asia.