Alibaba’s AliExpress, PDD-owned Temu face supply chain challenges in South Korea amid rapid business expansion

This article was first published by The Korea Times in a partnership with the South China Morning Post.

Lawrence Woo, a 38-year-old office worker in Seoul, started using AliExpress a year ago after he was lured by the platform’s low prices. Woo found, for example, a laptop stand on AliExpress that costs 30,000 won (US$23) and comes with free shipping, which was a deal around 50 per cent cheaper than those offered by local retail sites.

Still, Woo said he was confused about the delivery time of merchandise he bought on AliExpress. For instance, it took AliExpress two months to deliver a smartphone camera protector film that he bought last autumn.

“The delivery time is too long,” Woo said. “I tried to cancel the order, but the customer service was not working.”

On Temu, product shipping times would range from six to 20 days, according to the Chinese budget shopping app’s website.

In South Korea, couriers crack under the weight of same-day deliveries

By comparison, Korean e-commerce giant Coupang is capable of shortening delivery times to within a day through its signature Rocket Delivery service.

Both AliExpress and Temu work with domestic logistics service providers such as CJ Logistics Corp, the oldest and largest parcel delivery firm in South Korea.

“It depends on [these companies’] supply chain,” said Zhuang Shuai, founder and chief analyst at Chinese market consultancy Bailian. “For instance, whether the sellers are local merchants or Chinese merchants, and whether the platforms have their own warehouses.”

Alibaba’s Cainiao and AliExpress start ‘5-day global delivery’ service

Despite those challenges, both AliExpress and Temu have pushed initiatives to improve supply chain efficiency in South Korea.

Long-time AliExpress user Lee Ye-seul, a 35-year-old resident of Seoul, said the platform’s delivery speed has improved, pointing out that some products she recently ordered arrived within four days of her online purchase. Still, she lamented another major problem: copycat designs widely seen on Chinese e-commerce platforms.

Echoing Lee’s view on copycat merchandise, office worker Woo said it was tough to determine the authenticity of branded products on Chinese shopping platforms. He suggested that these platforms set up a “patrol system” to punish counterfeiters.

How Temu, an app for US shoppers, helped PDD catch up with Alibaba in market value

Products bought from AliExpress are “unknowingly circulating” on Korean second-hand sales sites as counterfeits, according to Kang Hyoung-goo, a professor of finance at Hanyang University in Seoul.

“It is a stumbling block to expanding global outreach through K-fashion exports,” Kang said.

South Korea has become one of the major battlefields for Alibaba and PDD, as both count on overseas markets to maintain their business momentum amid sluggish user growth and weak spending in their home market.

Korea was ranked as the world’s fourth-largest e-commerce market with a projected revenue of US$139.8 billion in 2023, followed by Japan, according to a report from online database ECDB.

Although Chinese platforms have paved the way for many Korean consumers to gain direct access to China-made goods at extremely low prices, Woo and Lee both indicated that these online marketplaces would not become their prime destinations for shopping.

“I will keep using such platforms, but I’d rather turn to Coupang or Naver Shopping for daily necessities or fashion items,” Woo said.