Introduction
Against the backdrop of the turbulent Korean economy, the fog of the consumer market is getting thicker. With the outbreak of political events such as the impeachment of the president, consumer confidence has been further eroded, and small and medium-sized enterprises are facing great pressure. However, in this chaos, China's e-commerce platform Temu has entered the South Korean market with its unique low price strategy, triggering an unprecedented price war. And this is also a close relationship for our POD clothing sellers to decide whether to enter the Korean e-commerce market, so at this time, do we have to use the Temu platform to enter the Korean e-commerce market? Next, this article will delve into Temu platform's current strategy to explore the impact of this change on the Korean e-commerce industry.
How Temu's low price strategy is disrupting the Korean e-commerce market
In the current macroeconomic downturn, Temu quickly attracted the attention of a large number of Korean consumers with its unit price as low as a few dollars and large coupons, free shipping and other promotional means. This low price model not only brings benefits to consumers, but also brings a huge impact to the local e-commerce platform. The following is the specific performance of Temu's low price strategy and its impact:
1. Temu's low price advantage
- Value products: Temu offers products with a unit price as low as a few yuan, meeting consumers' demand for high cost performance.
- Large coupons: By issuing large coupons, further reduce the actual cost of payment for consumers.
- Free Shipping policy: Free shipping policy makes shopping more convenient and economical.
2. Countermeasures of local e-commerce platforms
- Gmarket's Big Smile Day event: Gmarket Adjustment Year “ Big Smile Day ” Activities to “ Lowest price online ” As the goal, make every effort to improve the price competitiveness of goods.
- 11Street's price monitoring: 11Street launches ultra-low cost products below 10,000 won and strengthens price monitoring to ensure price stability during the event.
3. Market reshuffle and enterprise dilemma
- TMON's financial crisis: TMON tried to increase sales through its low-price store program, but intense competition squeezed margins and the financial crisis worsened.
- Wave of store closures: As of November 2023, 79,696 online stores have closed, and it is expected to exceed 80,000 in 2024.
4. Rise of cross-border sellers
A large number of cross-border sellers rely on Temu's platform to introduce high-quality and inexpensive Chinese goods into the Korean market and compete with local companies for consumers.
The escalation of the price war has not only intensified the market reshuffle, but also made the competitive environment of South Korea's e-commerce industry increasingly fierce.
5. Future outlook
- TEMU's continued expansion: Supported by strong data performance and a low price strategy, TEMU has become an important player in the Korean e-commerce market.
- Changes in market pattern: With the addition of more cross-border sellers and the intensification of market competition, South Korea's e-commerce industry may usher in a new pattern.
Growth potential of South Korea's e-commerce market
Despite the current challenges facing the Korean e-commerce market, its growth potential is still huge. According to the latest report from GlobalData, South Korea's e-commerce market is expected to grow 10.2% year-on-year to reach $118 billion this year. Over the next five years (2024 to 2028), the market is expected to grow at an average annual rate of 7.8%, climbing to a total size of $151.3 billion by 2028. This shows that despite the fierce competition in the market, the Korean e-commerce market still has broad room for development.
Conclusion
Driven by Temu's low price strategy, the Korean e-commerce market is undergoing a profound transformation. Local e-commerce platforms have had to compete on price, while cross-border sellers have used Temu's platform to bring inexpensive Chinese goods to the Korean market. In the future, the competitive situation of the South Korean e-commerce industry is bound to be more intense, and Temu can continue to consolidate its market position, it is worth paying attention to, we POD clothing sellers, if you want to intervene in this price war, it is necessary to reduce the cost, in order to obtain enough advantages, at the same time, low-price products do not represent low-quality products, and different markets about “ Quality ” The demand is also very different, so in terms of whether to intervene in the Korean market, POD clothing sellers should have a more in-depth understanding of the needs of Korean consumers, which aspects of style, fabric, design are more focused, and whether they have costs or other advantages in this regard? According to their own comprehensive conditions, in order to better make the decision whether to intervene in the Korean e-commerce market.
FAQ (FAQs)
1.Q: How did Temu enter the Korean market?
- A: Temu officially entered the Korean market in July 2022 and quickly attracted the attention of a large number of Korean consumers with its low price strategy and various promotional means.
2.Q: How do South Korean e-commerce platforms cope with Temu's competition?
- A: Local e-commerce platforms such as Gmarket and 11Street have improved the price competitiveness of their products by adjusting promotional activities and strengthening price supervision, in response to Temu's low price strategy.
3.Q: What is the impact of Temu's low price strategy on the Korean market?
- A: Temu's low price strategy has not only brought benefits to consumers, but also triggered fierce competition among local e-commerce platforms, resulting in many local platforms facing survival pressure and even a wave of store closures.
4.Q: How will the competition in the Korean e-commerce market develop in the future?
- A: With the strong expansion of Chinese platforms such as Temu and the addition of more cross-border sellers, the competition in the Korean e-commerce market will become more intense, and the market pattern will usher in new changes.
5.Q: What is the growth potential of the Korean e-commerce market?
- A: Despite the fierce competition in the current market, the Korean e-commerce market still has great growth potential. It is expected that the market size will continue to expand in the next few years.
