"Same Product Half Price on Korean Shopping Malls"…Inside Temu & Ali's 'Ultra-Low Prices' [Chosun Price Chronicles]

③ People Seeking 'Ultimate Cost-Effectiveness'
Chinese Direct Purchase Apps Stand Out with Ultra-Low-Priced Practical Items
Enduring 1-2 Week Delivery Inconvenience... Finding Cost-Effective Honey Items

More and more people are getting hooked on finding cost-effective "honey items" on Chinese direct purchase (direct import) applications (apps) like Temu and Ali Express. Due to aggressive marketing by Chinese companies emphasizing ultra-low prices, most products are priced lower than or similar to those in domestic online shopping malls, leading to a rapid absorption of the domestic consumer base with thinner wallets.

On the Chinese e-commerce platform Temu (left), the car backseat air mattress is priced around 21,000 KRW, while on Coupang (right), it is 36,000 KRW. Photo by Coupang, Temu capture

Same product, price difference over 10,000 won

On the 19th, a car rear seat air mattress for camping sold on Coupang, which prominently features price competitiveness on its "Special Sale" main page, costs 36,000 won, including free shipping. However, the same product shown in photos is sold for the low 20,000 won range on Chinese direct purchase apps like Temu. Shipping is also free there.

Pet supplies are another category where Chinese app products are cheaper than domestic ones, making them popular among consumers. A cave-shaped cat bed is priced in the mid-20,000 won range on domestic shopping malls, but can be purchased for around 8,000 won on Ali Express, Temu, and similar apps. Inclined pet feeding bowls are sold for around 1,000 won on overseas direct purchase apps, while domestic shopping malls price them in the 10,000 won range.

The situation is similar for everyday essential consumables classified as relatively low-priced products domestically. For example, eyebrow scissors cost 1,000 to 2,000 won at Daiso and around 4,000 won at Olive Young, but can be bought for less than 500 won on Temu and Ali Express. Chinese-made products such as cushion puffs, hair ties, and phone charging cables are also much cheaper on Chinese direct purchase apps.

Users who initially avoided Chinese direct purchase apps due to "counterfeit product controversies" often tried them once during big sale seasons with significantly reduced prices and then became loyal customers because of the price benefits. Yu Ji-eun, a woman in her 20s, said, "I first used a direct purchase app during Black Friday last November. At first, I was disappointed because the actual product was different from what I expected, but after several purchases, I learned how to select products carefully, so now I turn to direct purchase apps first when I need something." She added, "I still don't fully trust the quality of products, so I don't buy items like frying pans or electronics, but I easily buy consumables because many products come with free shipping."

Photo by Yonhap News

Chinese apps growing amid Korea's thrifty tech craze

Global market research firm Euromonitor defines the consumer behavior of searching for cost-effective products within a limited budget as "premium thrifty tech" and lists it as a 2024 global consumer trend. Euromonitor stated, "Consumers seek the best deals beyond just price tags" and "They will look for smart ways to maximize their budget without lowering the quality of the products they purchase."

As thrifty tech consumption spreads in a high-inflation environment, Chinese apps Ali Express and Temu became the fastest-growing apps in the Korean market last year. According to app and retail analysis services WiseApp, Retail, and Goods (WiseApp), the app with the largest increase in Korean users last year was Alibaba Group's Ali Express, with an average monthly increase of 3.71 million users.

Temu, a subsidiary of Chinese e-commerce company Pinduoduo, also entered the Korean market in July last year and gathered nearly 1 million users within two months. Currently, its average monthly user count exceeds 3.5 million, ranking second in growth. Temu holds the number one spot for downloads on both Google Play Store and Apple App Store, with cumulative downloads exceeding 100 million.

Korean Daiso stands out in health and beauty market with high cost-effectiveness and accessibility

Consumers who are reluctant to use Chinese direct purchase apps and find it difficult to endure the inconvenience of waiting 1 to 2 weeks for delivery after purchase are turning to Daiso, which offers many low-priced products and competitiveness in convenience and accessibility. The number of Daiso stores nationwide surged from about 500 in 2010 to around 1,500 this year. Daiso is a lifestyle goods retailer offering products at six fixed price points: 500 won, 1,000 won, 1,500 won, 2,000 won, 3,000 won, and 5,000 won.

Last year, Daiso particularly stood out in the beauty market through collaborations with cosmetics companies. It showed such strength that some even speculated it could become a rival to Olive Young, which holds a near-monopoly in the domestic H&B (Health & Beauty) market.

Consistently releasing cost-effective products is a key factor in its popularity. Last winter, Daiso attracted attention as a "Uniqlo alternative" by launching cold-weather shoes, padded vests, and fleece clothing. Daiso's sales increased from 2.4215 trillion won in 2020 to 2.6048 trillion won in 2021 and 2.9457 trillion won in 2022. Considering the growth trend, its 2023 sales are estimated to have exceeded 3 trillion won.

Recession-driven consumption expected to continue for the time being

Experts predict that demand for ultra-low-priced products will continue this year. Changes in consumption tend to lag behind income levels, and as perceptions of economic recession grow, efforts to reduce spending are expected to intensify.

Professor Lee Young-ae of Incheon National University's Department of Consumer Studies said, "Talks about a difficult economy and reduced disposable income have been around for a long time, but recession-driven consumption is only now becoming prominent. Consumers don't reduce spending just because their income temporarily decreases. However, with ongoing concerns about interest rate fluctuations and inflation, they seem to believe their income is continuously declining. They now feel they cannot endure it anymore and are trying to cut back on consumption."

She added, "Products sold on Chinese direct purchase apps like Temu are priced low, making it easy for consumers to consider buying them. Also, when consumers choose what to buy, they mainly focus on functionality, and price plays a major role in determining that. Therefore, there is a psychological tendency to look for even the slightest price difference."