[비즈한국] As the economic downturn persists, the popularity of AliExpress is rising once again. However, domestic sellers who have entered the platform are voicing concerns over sluggish sales. This is because while consumers are purchasing ultra-low-priced Chinese products, their interest in products from domestic sellers has dropped significantly. Industry experts point out that AliExpress needs to devise strategies to retain these domestic sellers.
"Even selling at no margin, it's not considered ultra-low price": Domestic seller sales slump
According to Mobile Index, a data platform by IGAWorks, the number of monthly active users on AliExpress reached approximately 7.12 million last month. This is a 2.6% increase compared to a year ago (6.94 million). While AliExpress saw a gradual decline in users from March 2024 through the summer, the user base began to grow again in the second half of last year.
Industry observers analyze that as the economic downturn continues, more consumers are turning back to AliExpress, which emphasizes ultra-low prices. One consumer said, "I stopped using AliExpress after making a few fun purchases when it was popular early last year. Then, I started using the app again a few days ago," adding, "Since I can buy the same products much cheaper, I compare prices and purchase non-urgent items on AliExpress."
While the consumption of low-priced goods imported directly from China has increased, customer interest in products from domestic sellers on the platform has significantly plummeted. A seller named 'A' on AliExpress confided, "I'm hitting record-low sales. Sales were fine until February, but since last month, the situation has become noticeably serious, and I have endless worries. I'm starting to think it might be time to leave AliExpress."
As AliExpress expanded its presence in the domestic market in October 2023, it launched 'K-venue,' a corner for Korean products. To recruit domestic sellers, it even offered an unconventional 'commission waiver' policy. Thanks to this, it was able to secure domestic sellers quickly, despite being a latecomer to the e-commerce market. Sellers were highly satisfied due to the subsidies poured into large-scale promotions.
The atmosphere shifted when the commission waiver benefit ended. AliExpress terminated the policy in January and began charging commissions in February. The commission rates vary by product category. AliExpress stated that they are "on par with or the lowest among industry standards."
With commissions introduced, some domestic sellers slightly raised their product prices. They adjusted prices to levels similar to other platforms, whereas previously they had been selling at the lowest possible prices on AliExpress due to the waiver. However, complaints about a noticeable decline in sales have followed.
Seller 'B' noted, "Even though I sell products cheaper than on other platforms, many consumers still think it's 'expensive for AliExpress,'" adding, "Because of AliExpress's early marketing, consumers have developed an expectation that 'AliExpress products must be very cheap.' They won't buy unless the price is so low that there's no margin left."
"Must lower prices to join the 100 Billion Festa": A bitter pill to swallow
As the sales slump continues, there is talk that AliExpress is inducing sellers to lower product prices. Recently, AliExpress notified domestic sellers of changes to the participation conditions for its '100 Billion Festa.' Previously, sellers could participate if they had at least one sale in the last 30 days and an 80% delivery rate within 72 hours. From May, however, they must meet the criteria of at least five sales in the last 30 days and a 90% delivery rate within 72 hours.
The 100 Billion Festa is a major discount event where AliExpress provides 100 billion won in shopping subsidies. Products registered in the event receive high discount rates, and the discount amount is covered by AliExpress. Given the high level of consumer interest, sellers are very eager to participate in the event.
Seller 'C' pointed out, "There are many products that didn't sell a single item last month. To participate in the 100 Billion Festa, sales figures have to go up, and to do that, don't you have to lower the price?" adding, "Ultimately, the intention is to induce sellers to lower prices voluntarily."
An AliExpress official explained, "We set prices through mutual consultation with K-venue sellers," and "We are continuously strengthening the K-venue channel by diversifying specialized categories such as fresh food, beauty, fashion, and auto. We are also providing commission benefits to new and small-to-medium enterprise sellers to help boost domestic seller sales."
Industry experts predict that AliExpress will become even more aggressive in targeting the domestic market in the future, as its growth in the U.S. market has been curbed by the abolition of the small-value duty exemption system. Starting on the 2nd of next month, tariffs will be applied to imports worth $800 or less coming into the U.S. from China and Hong Kong.
Lee Jong-woo, a professor of business administration at Ajou University, pointed out, "As it is difficult to build competitiveness in the U.S. market, they are likely to target the Korean market more aggressively," and added, "There is no business viability in just selling low-priced Chinese manufactured goods. Securing domestic sellers is important. However, repeating the same promotions will have limitations in retaining sellers."
AliExpress announced last year that it would invest $200 million to build a logistics center in Korea to strengthen its market competitiveness. While locations like Incheon and Pyeongtaek were mentioned as candidates, there has been little progress. An AliExpress official stated, "Nothing has been finalized yet. We plan to make an announcement once details are decided."
Preparations for a joint venture with Shinsegae004170 are also underway. In January, Shinsegae Group filed a business combination report with the Fair Trade Commission (FTC) for the establishment of a joint venture between Gmarket and AliExpress. The review results have not yet been released. An FTC official explained, "The review is in progress. The review period is 30 days from the filing date but can be extended up to 90 days. The period during which supplemental materials are requested is not included in the review period," and added, "Usually, reviews for large companies often take longer than 30 days. It is not being delayed for any special reason."