The fierce battle for market dominance in South Korea’s e-commerce sector is becoming increasingly pronounced as major players evolve their strategies in response to mounting competitionRecent reports indicate that homegrown e-commerce giants like Gmarket and 11Street are consolidating their resources to bolster their pricing strategies in an effort to attract price-sensitive consumersMeanwhile, global competitors such as AliExpress and Temu are seizing the opportunity presented by South Korea’s year-end shopping season, which may lead to an explosive price war in November.

Notably, Gmarket has made remarkable changes to its annual promotional event, “Big Smile Day,” scheduled for November 1-10, with a declared aim of achieving the lowest prices available across the internetGmarket is proactively inviting sellers who can offer competitive prices to join the sale while also covering the costs of discount coupons, thereby alleviating the financial burden on sellers

This bold move underlines Gmarket’s commitment to remain competitive within the increasingly saturated e-commerce landscape.

On the other hand, 11Street is preparing for its own promotional event, dubbed “Grand Eleventh Day,” ensuring that a variety of high-value products are availableExecutives from 11Street expressed their excitement, claiming that this year’s promotional offerings will be more appealing than ever, indicating the levels of strategic innovation these platforms are pursuing.

Not to be outdone, AliExpress South Korea is planning its largest promotional campaign since establishing its presence in the market, with a promotional message shared on social media touting a more elaborate and unique event compared to last yearSuch aggressive strategies by these international platforms are creating substantial pressure on local e-commerce businesses, emboldening them to step up their game in a bid for market survival.

The reality is that the competitive nature of the South Korean market has evolved significantly; it can no longer be referred to as an untouched oasis for e-commerce

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A wave of closures has swept through the sector, with data revealing a staggering 37% increase in the number of online shopping platform shutdowns in the past year, amounting to around 78,000 businessesEven Gmarket, despite its scale, has experienced declining performance over the past three consecutive years, highlighting the tumultuous climate within the industry.

In the face of these struggles, e-commerce platforms are grappling with various formidable challenges, particularly a severe decline in growth momentumNew entrants like AliExpress and Temu are utilizing their impressive pricing strategies to carve out a significant stake in the market, presenting an unprecedented challenge to established South Korean e-commerce platformsThis dire competitive landscape necessitates that local operators adopt robust measures to rejuvenate their performance metrics and unearth any potential demographic segments that could revitalize their businesses.

Under intense pressure to improve their results, companies such as Gmarket and 11Street are now shifting their strategic focus towards untapped markets, known as deeper or tiered markets

This strategic pivot is driven by critical economic factors, notably the persistent inflation and the resulting changes in consumer spending behavior in South KoreaWith consumers becoming increasingly price-sensitive due to rising costs of living, there is a pronounced shift towards seeking out products that offer both affordability and reasonable quality.

As consumers prioritize value for money, items that offer significant discounts or possess substantial price reductions often catch their attention, leading to increased purchasing activityThis trend continues to unveil an exciting potential in deeper markets, prompting local e-commerce operators to optimize product categories, adjust pricing frameworks, and amplify marketing efforts in order to attract price-conscious buyersBy delving deeper into these market niches, platforms like Gmarket and 11Street are working to increase their order numbers and sales revenue while solidifying their competitive stances in the mainland e-commerce arena.

For instance, in September 2023, 11Street launched its "9900 Won Store," focusing on products priced below 10,000 won

The initiative resulted in an influx of customers, far exceeding monthly sales expectationsBy October, the store experienced an 80% increase in daily sales compared to the previous month, while sales figures in November saw a staggering increase of 196%.

Similarly, TMON is capitalizing on the trend towards low-cost offerings, having introduced its “10,000 Won Happiness” store with products spanning various low-price tiersBy November 2023, TMON reported a staggering 98% increase in sales from the previous yearThese examples illustrate a collective acknowledgement within the South Korean e-commerce sector that affordability is becoming the key to consumer attraction.

As the peak shopping season in November approaches, it is almost certain that the e-commerce price war in South Korea will escalateYet, while low pricing may serve as a temporary catalyst for sales growth, platforms must remember that maintaining product quality and retaining core competitive advantages are imperative for ensuring long-term performance sustainability