iPhone 15 Cheaper Than in Korea... China’s '618 Shopping Festival' Floods Discounts Targeting Direct Buyers [Chosun Price Chronicles]

(22) Discounts Targeting Korean Direct Shoppers
"Free Shipping to Korea for Purchases Over 249 Yuan"

As the week of China's largest online shopping festival in the first half of the year, the '618 Shopping Festival,' begins, Chinese platforms are launching massive discount events targeting Korean direct purchase shoppers. 618 is held around June 18, the anniversary of the founding of Chinese e-commerce company JD.com. Along with the November Singles' Day, it is considered one of the biggest sales events in the retail industry.

JD.com, one of the two major Chinese online platforms running the 618 discount event, is selling the iPhone 15 Pro Max (256GB) for 7,949 yuan, approximately 1,562,000 KRW. As of the 14th, the same model is sold on Coupang for about 1,737,000 KRW. Other models are also cheaper on JD.com than on Coupang. The iPhone 15 Pro (256GB) is priced at 6,999 yuan (about 1,322,000 KRW), and the iPhone 15 (256GB) at 4,599 yuan (about 869,000 KRW). On Coupang, they can be purchased for 1,549,000 KRW and 1,260,000 KRW respectively.

As the week of China's largest shopping festival in the first half of the year, the '618 Shopping Festival,' has begun, JD.com is holding discount events. Photo by JD.com

The reason 618 events are cheaper is due to additional benefits provided by the commerce companies combined with discounts from the participating sellers. In the case of Alibaba's Taobao, a 15% discount is applied to event items, or a 50 yuan discount is given for every 300 yuan spent. Pinduoduo offers a 30% discount on purchases over 200 yuan.

Prices of the iPhone 15 series sold on JD.com. Photo by Baidu

In particular, Taobao is actively marketing to Korea, where the 'direct purchase craze' is taking off. During the 618 Shopping Festival, Taobao offers free shipping to Korea for purchases over 249 yuan. For shipping large items to Korea, shipping fees can be discounted by up to 41%. Even with shipping fees, it costs only 21.5 yuan (about 4,050 KRW), which is about 1,000 to 1,500 KRW more than domestic courier fees of 2,500 to 3,000 KRW.

Alibaba, Temu, Shein Popular... 618 Also in Korea?

The number of direct purchase transactions has been rapidly increasing every year. Overseas direct purchase amounts were 4.4 trillion KRW in 2020, 5.3 trillion KRW in 2021, 5.9 trillion KRW in 2022, and 6.7 trillion KRW in 2023. The increase in direct purchases gained momentum as Chinese direct purchase applications (apps) like Alibaba and Temu launched 'ultra-low price offensives.' Chinese direct purchase apps have gained strong price competitiveness across various categories such as fashion, beauty, daily necessities, and electronics, causing major Korean e-commerce platforms to lose ground.

According to recent app and retail analysis services WiseApp, Retail, and Goods, the number of active monthly users (MAU) of AliExpress and Temu in Korea in May was 8.3 million and 7.97 million respectively. Although MAU decreased by 3.4% and 3.3% compared to the previous month, AliExpress ranked second after Coupang (31.11 million), and Temu ranked fourth after 11st (third place with 7.99 million).

The craze for Chinese direct purchases among domestic consumers is expected to continue for the time being. In April, the Korea Chamber of Commerce and Industry surveyed 800 consumers who had used Altesh (Alibaba, Temu, Shein) within the past year about their 'usage status and perception of Chinese online shopping platforms,' and 56.6% of users responded that they intend to continue using them in the future.

Large-scale Sale Events... Effect on Recovery of Consumer Sentiment

Massive discounts also affect price declines. After last year's 'record-breaking online performance' Black Friday in the U.S., durable goods prices fell. Adobe's marketing data analysis solution Adobe Analytics reported that on Black Friday, November 24, 2023, U.S. e-commerce sales amounted to $9.8 billion (about 12.8 trillion KRW), a 7.5% increase from the previous year.

U.S. consumers mainly purchased electronics, smartwatches, TVs, and audio equipment. According to market research firm Sycana, the average price of LCD TVs during Black Friday week in 2023 was $305 (about 400,000 KRW), down 11.6% from $348 (about 460,000 KRW) in 2022, and tablet prices fell from $352 to $291 over one year.

In Korea, the Korea Sale Festa (Kosefe), held in November, is a representative large-scale discount event. Such discount events also play a role in restoring consumer sentiment exhausted by high inflation. After last year's Kosefe, Black Friday, and Singles' Day, online shopping transaction amounts in November exceeded 20 trillion KRW, marking an all-time high.