April 30, 2024

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AliExpress, the Chinese e-commerce platform owned by Alibaba Group, has been reaching out to Korean food companies to diversify its product range and gain more recognition among Korean consumers.

Following South Korean food giant CJ CheilJedang, which joined the Chinese platform early this month, a slew of Korean food companies are either entering or considering joining the Chinese platform.

According to industry sources on Thursday, Dongwon F&B, known for its canned tuna products, and Samyang Foods, famous for its spicy Buldak ramyeon series, have signed deals with AliExpress. Nongshim and Pulmuone are also reviewing entry into the Chinese platform.

"With the Chinese platform gaining traction nationwide recently and more people flocking to it, we couldn't help but start to see the platform as another opportunity to expand our sales channel," said an official from one of the food companies that signed a contract with AliExpress.

Lately, AliExpress has been ramping up its efforts to onboard more Korean companies to sell their products on their platform. This initiative comes in response to increasing feedback that the range of products offered on AliExpress has primarily focused on mass-produced items manufactured in China.

As part of its efforts, AliExpress launched K-Venue in October, a dedicated section exclusively showcasing products from Korean sellers. In particular, AliExpress' primary focus is on food products.

“By offering daily groceries that people purchase regularly, AliExpress might aim to encourage customers to revisit frequently, thereby solidifying its consumer foundation,” said Lee Young-ae, a professor of consumer science at Incheon University.

One of AliExpress' strategies to attract Korean companies to their platform is taking zero commission for both entering the platform and selling products. According to a report released by the Fair Trade Commission in December, the average commission on Korean e-commerce platforms was 15.6 percent in 2022.

Coupang, the New York-listed e-commerce giant, was identified as the company with the highest commission rate, at 22.6 percent.

"As AliExpress is increasingly reaching out to the Korean market with a package of promotions, Korean manufacturers cannot avoid their courtship either," said an official from Dongwon F&B.

Meanwhile, regarding the Chinese platform's notorious reputation for products of low quality, companies that have contracted with AliExpress say that they are exempt from such concerns because they will manage the product quality themselves.

"Of course, we have carefully weighed the pros and cons of entering AliExpress, and concluded that it would be acceptable for us to join the platform because we will have control over the entire process, from manufacturing to delivering the items," said a Dongwon official.

Unlike items purchased directly from Chinese sellers and delivered to Korean consumers under AliExpress' control, products on K-Venue are delivered directly to Korean consumers from Korean manufacturers.

Meanwhile, its competitive pricing, which was once the hallmark of AliExpress in the e-commerce market, appears to be slipping.

For example, a CJ CheilJedang frozen chicken product is 18,610 won ($14) for three packs on Naver, while it is listed for 32,062 won for four packs on AliExpress.

While the Chinese platform’s ultracheap deals were made possible because most products were mass-produced in China, industry officials explained the situation will be different for Korean-manufactured products.

"As the retail price for the product release is initially fixed, the final product price will not vary significantly across outlets nationwide,” said a food company official who wished to remain unnamed.

"However, since AliExpress is offering a package of promotions to attract Korean manufacturers, if they provide a considerable option, then we can share the burden.”

By Hwang Joo-young (flylikekite@heraldcorp.com)
The Korea Herald