Coupang’s delivery trucks (Image courtesy of Yonhap)
SEOUL, Mar. 28 (Korea Bizwire) – South Korea’s e-commerce market has become the battleground for a high-stakes investment war between domestic giant Coupang and Chinese powerhouse AliExpress, as both companies aggressively pursue market dominance.
The clash intensified after AliExpress, owned by the Alibaba Group, announced plans to invest $1.1 billion (1.5 trillion won) in South Korea over three years to expand its business in the country.
Ray Zhang, the head of AliExpress Korea, stated that the company aims to bolster its seller base by eliminating commissions for Korean vendors, allowing them to reach more consumers and foster a mutually beneficial business ecosystem, particularly for small and medium-sized partners.
AliExpress has already launched a massive shopping subsidy event at its K-Venue platform, offering shopping credits worth 100 billion won.
Additionally, the company provided 100 million won worth of exclusive coupons through a separate promotion, attracting over 177,000 participants on the first day alone, with all of the coupons being claimed within hours.
Not to be outdone, Coupang swiftly responded with a counteroffensive strategy. On Monday, the company announced an investment plan exceeding 3 trillion won over three years to expand its “Rocket Delivery” service nationwide by 2027.
The plan includes increasing the number of fulfillment centers by at least eight and enhancing the delivery network to cover 230 out of 260 cities and counties across South Korea, up from the current 182 areas.
Ray Zhang, the representative of AliExpress Korea (Image courtesy of Yonhap)
Within hours of Coupang’s announcement, AliExpress intensified its offensive by extending its commission-free policy for Korean sellers on the K-Venue platform until June 2024 and pledging additional support measures.
The escalating battle between Coupang and AliExpress has been dubbed a “silent war” within the industry, as the two giants vie for dominance in the lucrative South Korean e-commerce market.
Industry experts view the confrontation as an inevitable consequence, given Coupang’s established position in the domestic market and the threat posed by the well-funded entry of AliExpress and other Chinese e-commerce players, collectively referred to as “C-commerce”.
“Coupang’s 3 trillion won investment plan, despite accumulating losses of 6 trillion won, reflects its determination to fend off the C-commerce invasion with its nationwide logistics network and Rocket Delivery service,” said an industry insider.
As Coupang and AliExpress engage in this spending spree, smaller domestic retailers have expressed concerns about the intensifying price wars, promotions, and the inability to match the giants’ infrastructure investments amid the economic downturn.
The industry also anticipates AliExpress’s deep pockets, with the Alibaba Group holding cash assets of $85.5 billion, could lead to further investment escalation in South Korea, putting additional strain on Coupang and local retailers as they strive to remain competitive.
Ashley Song (ashley@koreabizwire.com)
