AliExpress (Ali), a Chinese e-commerce platform known for its focus on low-cost goods, has expanded its product lineup to include fresh food items such as fruits and meats. This move aims to address a previously identified weakness in China’s e-commerce (C-commerce) sector and attract consumers in South Korea by reducing delivery times and diversifying its product range.
C-commerce, represented by companies like Ali, Temu, and Shein, is now aggressively entering the fresh food market. This has caused concern among Korean e-commerce firms, such as Coupang and Kurly, known for early-morning deliveries, and traditional hypermarkets and SSMs (corporate supermarkets). There is concern that Chinese companies could leverage their financial power to compete on price in the fresh food segment. This is significant as e-commerce platforms, already leading in household goods shopping, encroach on the fresh food sector traditionally dominated by physical stores.
On Mar. 4, Ali started offering fresh produce, including strawberries, tomatoes, eels, and beef. Although Ali has previously sold processed items like cola and canned goods, this is its first foray into the fresh food market, where maintaining quality and ensuring speedy delivery are crucial. Over 300 Korean companies had signed up to supply fresh products within a week of this new initiative.
Ali announced a reduction in delivery times from three days to two to enhance its appeal. The company also plans to decrease this time to next-day delivery, matching local standards, once its Korean logistics center is completed by the end of the year. This improvement has been partly facilitated by the acquisition of many local sellers by C-commerce companies, shortening the delivery window to one or two days in some cases.
C-commerce firms are improving their logistics and strategizing to compete with Korean companies on pricing. Ali and Temu, in particular, have been focusing on growing their local subscriber base, enabling them to reduce prices further. This strategy is supported by their significant investments in sales and marketing, with Ali and Temu spending $4.7 billion (6.3 trillion won) and $2.98 billion (3.98 trillion won), respectively, in the last quarter of the year. A local retailer official said, “The entry of Chinese companies into the fresh food market has intensified competition across all product categories, both online and offline.”
Korean e-tailers are responding to these challenges by enhancing their services. Gmarket, for instance, has added fresh products to its Smile Delivery service, promising next-day delivery for orders placed by 6 p.m. the previous day. Lotte ON is launching a program to assist underperforming sellers with online advertising and customer targeting, offering 100,000 advertising credits as an incentive.
SSG.com plans to significantly increase the number of products available for its next-day delivery service, called SSG 1-Day Delivery, for orders by 11 p.m., to more than 17,000 this year, up from 4,000 last year. 11Street is opening stores that feature quality SME products priced from $1.5 to $7.4 (2000 to 9900 won), and like Ali, it is adopting a commission-free model for some sellers. Furthermore, Lotte ON has recently lowered its commission rates for specific merchants from 9% to 5%.
