Coupang beat E-Mart to take first place in the distribution industry last year thanks to its low prices and rocket delivery. However, it is said that Coupang may have to give up its first place in distribution after just one year. The only universities that Coupang appeared in the Korean distribution market, where there were concerns about Coupang's monopoly, were not E-Mart or Lotte, but China's Alix Press and Temu. You may have heard of Ali, but Temu is a bit unfamiliar. Temu is a Chinese e-commerce company similar to Ali. Ali is still major in Korea, but Temu is said to be popular overseas. I'll talk about Temu in more detail later. Coming back, both Ali and Temu companies are quickly dominating Korea's online distribution market with ultra-low prices that only Chinese companies can achieve. Even if Chinese products were cheap for a day or two, everyone thought they would buy them once or twice for fun and then end up throwing them all away. It's definitely different from direct shopping in China a few years ago. The numbers show it. If you look at the number of hairdressers in commerce as of last October, first place is Coupang, second place is 11th Street, and second place is AliExpress. Looking at the number of users, it still lags behind Coupang. What's scary is their growth. Chinese direct purchase apps AliExpress and Temo ranked first and second, respectively. Ali Express increased the number of users by 3.71 million in November compared to last January, and Temu increased by 3.54 million during the same period. How are Chinese direct purchase platforms rapidly dominating the Korean market? First of all, I am investing a huge amount of money. Ali Express is putting a lot of effort into the Korean market, investing close to 100 billion won in the Korean market last year. We set up a dedicated customer center and shortened the delivery period from about 12 weeks to 3 to 5 days. Many products were shipped free of charge and a free return service was implemented to respond to quality controversies. Recently, we used actor Ma Dong-seok to film an advertisement like this. This year, the CEO directly mentioned that the delivery period could be shortened to 1 day by creating a logistics center in Korea. Taemu, which is closely following management, is targeting the 1020s and is attracting young people through a referral system that provides points that can be used as cash when a friend joins Temu. Advertising is so aggressive that there is even a joke in the advertising industry these days that Temo is feeding metal. Like Ali, it provides free shipping and free returns, and of course, pays compensation if the product is not delivered within the compensated period. However, Temu's most attractive strategy is different. The price is cheaper than AliExpress and the catchphrase is shopping like a billionaire. Perhaps that's why Temo, which officially entered the Korean market in July of last year, later than Ali Express, surpassed Ali Express in terms of short-term growth. In the end, the core of AliExpress and Temu is low prices, which is natural considering the structure of the distribution industry. It is said that distribution involves purchasing goods from a manufacturer and delivering them to the final consumer through an intermediary seller, and the consumer purchase price is ultimately determined by this intermediate stage. The price is determined depending on how much it is reduced. It is said that Madein China products worth 3,500 trillion won annually are distributed around the world online. If China, the world's factory, takes responsibility for global distribution, the steps and physical distance from the factory to the consumer's place of purchase will be reduced, which will reduce consumer purchase prices. It has no choice but to decrease. Low sales commissions of 0 to 2% also help. Of course, the commission is inevitably reflected in the product price. Whether it is the top 10% or 45%, it is at an incomparable level. I personally compared and used Coupang Ali Temu. First, I installed Ali. I didn't really have anything to buy, but after looking at the recommended products, I remembered that I needed indoor shoes at home. They say Ali's strategy is to make people buy something because the price is cheap even if they don't have anything to buy. I searched for indoor babies, but it wasn't as cheap as I thought. I thought that it would be better to order from Coupang, thinking that this was about 80% of the Coupang price and that it was a rocket shipping fee, so I searched on Hippocampus. It's definitely cheaper than Ali. You have to meet the minimum order amount, so I included a lot of things. It's possible to shop like a billionaire. At this level, it’s worth giving up on rocket delivery. But why have Chinese companies suddenly become so serious about the Korean market? Until just a few years ago, if you wanted to purchase directly from a Chinese platform, you had to use a VPN to purchase it, and if you made a mistake, you would often get caught and have your revision suspended. The biggest reason is changes within China. In terms of size, the Korean market is actually only about one or two Chinese cities. Therefore, it was a market with poor cost-effectiveness for Chinese companies to target the Korean market, with poor return on investment. However, the situation inside China has deteriorated to the point where we have to focus on markets with poor cost-effectiveness. These days, we keep hearing that China's economy is in trouble. In particular, China's domestic economy is rapidly freezing. They are called moonlighters, meaning that they spend all their salary. The atmosphere in China's domestic market is not good enough that young Chinese consumers are starting to pursue counter-consumption, which means cost-effective consumption. That's why I'm actively looking outward. For this reason, Chinese online commerce companies' entry into Korea is expected to become more active this year. Next time, we will find out what impact these Chinese companies' movements will have on the Korean distribution market. Also, the next video will cover whether the Temu product shown in the middle of the video arrived on time and whether it is useful, so please be sure to visit the next video as well.
