The growth of Chinese shopping malls like AliExpress and Temu in the Korean market is also believed to have heightened Coupang’s sense of crisis. (Yonhap)
SEOUL, Jan. 13 (Korea Bizwire) –Coupang has re-established direct sales with LG Household & Health Care (LG H&H), nearly five years after the latter pulled its products from the Coupang platform following a dispute over pricing.
This move comes with large manufacturers and distribution chains increasingly joining the anti-Coupang front, and Chinese shopping platforms like AliExpress showing interest in entering the Korean market.
According to industry sources on January 12, Coupang and LG H&H agreed to restart direct purchasing and will gradually increase products available for Rocket Delivery from mid-January.
This development enables Coupang to broaden its consumer offerings by hosting LG H&H’s global brands like Coca-Cola, and popular essential goods from brands like Perio and Tech.
LG H&H’s luxury cosmetic brands such as OHUI, su:m37, and The Whoo will also be available at Coupang’s Rocket Luxury portal. With this addition, consumers can now access the top three domestic luxury brands, including Sulwhasoo and Hera, through Rocket Delivery.
LG H&H also benefits from the ability to sell its products through Coupang, which currently leads in online shopping mall market share. Industry analysts believe that Coupang proactively reached out to LG H&H, sensing a crisis as large manufacturers and distributors formed an anti-Coupang alliance, and with the impending entry of Chinese shopping platforms into Korea.
CJ CheilJedang stopped supplying major products like Hetbahn instant rice to Coupang at the end of 2022 over a price disagreement, then formed an alliance with Shinsegae and Naver to pressure Coupang.
Aliexpress is becoming increasingly influential in the domestic retail industry. Alibaba Group’s e-commerce platform, Aliexpress, will be an official partner of the 2024 Gangwon Winter Youth Olympic Games. (Yonhap)
Coupang responded by increasing partnerships with key small and medium-sized food manufacturers. However, the absence of LG H&H’s top brands, including beauty, household, and beverage items, posed a competitive disadvantage for Coupang.
Coupang’s exclusion of traditional bestsellers like Hetbahn and Coca-Cola left the company struggling to expand its customer base. After the conflict with Coupang, LG H&H faced a drop in sales growth, marking its first negative growth in 18 years in 2022 and a 44.9% decrease in operating profit from the previous year, falling below 1 trillion won for the first time in six years.
According to financial information company FN Guide, LG H&H’s performance last year is expected to show a 3.15% decrease in sales and a 30.7% drop in operating profit compared to the previous year.
The growth of Chinese shopping malls like AliExpress and Temu in the Korean market is also believed to have heightened Coupang’s sense of crisis. According to mobile market research firm Wiseapp, AliExpress’s monthly active users (MAU) in December last year reached 7.13 million, closing in on second-place 11st by a margin of 500,000, a more than threefold increase from early last year’s 2.27 million.
AliExpress is expanding its influence from direct overseas purchases to domestic open markets, recently hosting 13 Korean brands including LG H&H’s Coca-Cola, Cuckoo, and Aekyung Industry. AliExpress is also planning to build a logistics center in Korea this year, which could significantly shorten the current ’5-day delivery’ system, potentially attracting more users.
An industry insider commented, “From Coupang’s perspective, securing a variety of bestsellers seems to be a strategic move to elevate its response against the anti-Coupang alliance formed by major distributors and manufacturers, especially in the face of threats from Chinese shopping malls.”
Ashley Song (ashley@koreabizwire.com)
