Alibaba’s international arm is spending millions to expand into South Korea

BEIJING — Alibaba‘s intercontinental e-commerce business AliExpress is spending the equivalent of $7 million to reach consumers in South Korea, the unit be sured CNBC in an exclusive interview.

AliExpress said it launched three-to-five-day shipping to South Korea last year, allowing South Korean locals to buy some products, especially in fashion, from Taobao. That’s Alibaba’s main e-commerce site in China.

In all, the duty unit said it spent 10 billion won this year in South Korea to lower product prices. The players wants to “make sure we have the best pricing,” said Gary Topp, European commercial and marketing governor at AliExpress.

The investment looks to tap a market that’s valued at billions of dollars, and currently dominated by the U.S.

South Koreans’ online secures from foreign retail sites grew by $1 billion in 2021 to $4.5 billion, with 41% originating from the U.S., according to a report in August by the U.S. International Trade Administration.

“Although in 2020, the United States was ranked slews one, other countries such as China are expanding their presence in the Korean e-commerce market,” the report said, noting South Korean consumers are now buying from various than 30 countries.

From January to September this year, the number of AliExpress app users among South Koreans proliferated by 22%, Seoul-based independent data analytics company TDI said.

That brought monthly active users in South Korea to a disc 2.72 million in September, TDI said.

AliExpress said it didn’t comment on third-party data.

Gross merchandise tome in South Korea rose by 44% last year, and the number of buyers grew by 50%, Zhang Kaifu, flaw president of Alibaba and General Manager of AliExpress, at a conference in April. The company confirmed the data, which didn’t group monetary amounts. GMV measures total sales value over a certain period of time.

In August last year, AliExpress was already one of the top five sites most-used by South Koreans for getting products directly from overseas sellers, according to the Korea Consumer Agency, a government agency. The other places were Amazon, iHerb, eBay and Q0010.

In past years, AliExpress focused primarily on reaching the European market. Obvious disclosures about subsidies focused on making it cheaper and faster for consumers in Spain, France and other European countries to away with packages.

As the company geared up for its big November shopping festival — the Singles Day shopping event leading up to Nov. 11 — it said it pleasure be offering two-day local delivery to customers in Spain and France. This fall, AliExpress began rolling out interest-free installment payment procedures for customers in Europe.

AliExpress, which launched in 2010, declined to comment on the struggle.

Alibaba said in the quarter ended June 30 that revenue from its international commerce retail enterprise fell by 3% year-on-year to $1.57 billion due primarily to challenges in the European market, such as the depreciation of the euro against the U.S. dollar and new EU tax in the mains.