Jan 1, 2025

Coupang dominates local e-commerce market, but Chinese rivals gain ground Posted : 2024-12-30 15:53 TMON, WeMakePrice wallow in doldrums By Ko Dong-hwan This year, Coupang solidified its position as a leader in Korea's e-commerce industry, achieving profitability in the third quarter and posting record-breaking quarterly sales. At the same time, Chinese platforms are quickly gaining popularity among local consumers, drawing attention with prices that are significantly more competitive than those offered by their Korean rivals. In contrast, other players in the industry faced considerable challenges, struggling with cost-cutting measures and legal disputes over unpaid dues to tenant vendors. Industry analysts anticipate that the competitive landscape will become even more polarized and sharply defined in the year ahead. Coupang, known for its fast “Rocket Delivery” service, reported sales of 10.6 trillion won ($7.22 billion) in the third quarter, according to its holding company’s November disclosure. Operating profit for the same period reached 148 billion won, marking a significant turnaround from a 34.2 billion won deficit in the previous quarter. In 2023, Coupang set a new annual sales record, surpassing 31.8 trillion won, while operating profit reached 617 billion won. This year, the company is expected to exceed 40 trillion won in sales. Its immense popularity is evident throughout Seoul, where Coupang’s insulated delivery boxes are a common sight in front of residential doorsteps. The company has also announced plans to invest 3 trillion won by 2026 to expand its "Rocket Delivery" service, ensuring that online orders can be delivered nationwide by the next day. This ambitious strategy is expected to further solidify Coupang's position as the leader in Korea's e-commerce market. This year, Chinese e-commerce platforms like AliExpress and Temu have made a significant impact on the market. Initially, there were concerns about the quality of products on these Chinese e-commerce platforms, with fears that some items might be defective or pose health risks to consumers. However, the main appeal of Chese e-commerce platforms — the affordability of products — helped ease these concerns, enabling them to keep growing and expanding their market shares. Victims of TMON's insolvency crisis, which left tenant vendors unpaid and consumers without refunds, protest in front of the company's office in Gangnam District, southern Seoul, demanding prompt reimbursement, Aug. 13. Korea Times file. According to smartphone app data analysis firm Wiseapp, AliExpress became the second most popular online shopping platform during the first 10 months of this year. The platform's rising popularity aligns with the overall increase in market prices across the country's retail sectors this year, which has driven consumers to seek more affordable products. AliExpress last week also made headlines saying it formed a partnership with Shinsegae Group to upgrade the Korean retail conglomerate’s e-commerce platform called Gmarket. Using the Chinese company’s global distribution network reaching 200 countries, the Korean platform will be able to connect its tenant vendors with global consumers, Shinsegae said. The partnership indicates that Chinese e-commerce companies, which previously prompted the Korean government to hold emergency meetings to curb their growing market influence in Korea, are now also willing to support their Korean counterparts. Less popular e-commerce platforms like SSG.com, Lotte ON and 11th street are reducing costs and restructuring themselves to survive the market. SSG.com, another e-commerce platform under Shinsegae Group, appointed a new CEO in June and downsized its four divisions to two. Meanwhile, Lotte ON began encouraging employees to voluntarily resign earlier this year amid declining sales. 11st Street relocated from downtown Seoul to Gwangmyeong, Gyeonggi Province, in order to reduce office rental costs. The industry experienced some of its worst fallout this year, with TMON and WeMakePrice facing major difficulties. Due to dwindling sales, both companies repeatedly delayed payments to their tenant vendors, leading many to go bankrupt. According to prosecutors investigating the companies’ parent firm, Qoo10, the financial damage amounted to approximately 1.85 trillion won, affecting around 330,000 vendors and consumers. The authorities accused the three companies of embezzling around 100 billion won in corporate funds and causing loss of 72.7 billion won in losses to TMON, WeMakePrice, and another affiliate, Interpark Commerce, through unfair intergroup transactions.