"Buying 1000-Won Items Is Quite Enjoyable" Consumers Flock Amid Tough Living Conditions [Ultra-Low Price Era]①

Price Competitiveness as the 'Greatest Weapon' in the Era of High Inflation
AliExpress 'Cheonwon Mart' Discount Event and More Popular
Daiso's Uniform Price Under 5000 Won Also Faces Sold-Out Frenzy

#Car smartphone holder 1000 won, smart sensor trash can that automatically opens the lid when approached 4050 won. Automatic induction soap dispenser 5400 won.

Jung, a male office worker in his 30s, has recently become deeply engaged with the AliExpress (Ali) application (app). In the Ali app, there is a special section called 'Cheonwon Mart' where various daily necessities are sold starting from 1000 won, and the fun of browsing incredibly cheap prices and ingenious products is quite enjoyable. If you purchase three or more items, shipping is free and you can even get additional discounts. Delivery is guaranteed within a week, and if delivery is delayed, discount coupons are also provided.

As the era of high inflation prolongs, 'ultra-low price' products have become a consumer trend. After the COVID-19 pandemic, prices soared due to supply shortages and are still soaring due to the effects of high interest rates. Furthermore, as the 'two wars' between Russia and Israel continue, global economic uncertainty has increased, and consumers are flocking to products with price competitiveness.

'The originator of ultra-low prices' Ali... targeting global consumers

According to Mobile Index, an app analysis service by IGAWorks, on the 23rd, the Chinese e-commerce platform (C-commerce) Ali increased its monthly active users (MAU) from 4.24 million in September last year to 6.65 million last month, a 56% increase in one year. During the same period, another C-commerce platform, Temu, grew nearly fivefold. During this period, South Korea's inflation rate continued to approach 3%. The C-commerce platforms attracted Korean consumers by emphasizing ultra-low prices. As of last month, Ali's MAU ranks third among major domestic e-commerce platforms, following Coupang (31.25 million) and 11st (7.45 million).

Ali is an online shopping platform operated by Alibaba Group, China's largest e-commerce company, and rose rapidly as non-face-to-face transactions expanded worldwide due to COVID-19. China has a manufacturing base capable of producing various products cheaply due to low labor and raw material costs, and Ali grew by directly selling products with lowered unit prices through mass production by Chinese manufacturers to consumers worldwide. Additionally, as China's economic downturn led to accumulated inventory, Ali adopted an 'ultra-low price' strategy by supplying products at even cheaper prices, captivating not only Korean but also global consumers. Subsequently, other C-commerce platforms such as Temu and Shein joined in, aggressively targeting the domestic market at a rapid pace.

In Korea, the fact that individuals can use the list clearance system for overseas direct purchases to be exempt from customs duties further enhanced Ali's price competitiveness. Currently, individuals can be exempt from taxes when directly purchasing products under $150 for personal use. Because of this, the scale of direct purchases from China has also increased significantly. According to Statistics Korea, last year, Korea's online overseas direct purchase amount from China was 3.2873 trillion won, a 121.2% surge compared to the previous year. This accounts for about half of the total direct purchase scale. Last year, the purchase amount from China surpassed the United States for the first time ever, which had held the top spot. The purchase amount from the U.S. decreased by 7.3% year-on-year to 1.8574 trillion won.

Additionally, large-scale investment in discount events is cited as a factor that retained domestic consumers. Ali's '100 Billion Festa' is a representative example. The 100 Billion Festa means providing customers with shopping subsidies worth 100 billion won, offering additional discounts on products sold exclusively by Korean sellers on 'K-Venue,' or conducting time deals to sell products at special prices.

Ali started the 100 Billion Festa in March, during which it held special time deals selling products like fruits and sweet potatoes for 1000 won without shipping fees. At that time, customers flocked, and time deal products sold out within 10 seconds. Ali's time deals are still ongoing, recently focusing on special sales of beauty category products. The average discount rate for time deal products in October reached about 72%, and the products sold out within an average of one minute.

Daiso, the playground for teenagers, rises as a giant in the distribution industry

Daiso, a specialty store selling all products at a uniform price below 5000 won, is also gaining popularity. This is thanks to expanding its product range beyond low-priced daily necessities to include beauty products. It continues to attract attention by consistently releasing new products in its core daily necessities category.

The 'Malangfit,' a flexible storage container released last month, became a sold-out sensation as word spread about its convenience for organizing food. Around the same time, a smartphone fast charger also gained fame due to its affordable price of 5000 won, and it is currently known to be difficult to find in stores. This product is manufactured by a small and medium-sized partner company that supplies smartphone chargers to Samsung Electronics.

Daiso's cost-effective beauty products have also led industry trends. Beauty products sold at Daiso have gained popularity. Since the end of last year, Daiso has strengthened its beauty category by stocking cosmetics such as VT's Liddle Shot, gaining popularity mainly among young customers in their teens and twenties. Large cosmetics companies like Amorepacific and LG Household & Health Care have also launched and stocked Daiso-exclusive brands. Consequently, domestic convenience stores have also released cosmetics such as toners, lotions, and foam cleansers emphasizing cost-effectiveness (performance relative to price) one after another.

A Daiso store located in Jongno-gu, Seoul. Photo by Yongjun Cho jun21@

Daiso's popularity is proven by its performance. Last year, Asung Daiso, which operates Daiso domestically, recorded sales of 3.46 trillion won. It was the first time Daiso exceeded 3 trillion won in sales. Last year, operating profit also reached 261.7 billion won, marking record highs in both sales and operating profit.

As cost-effective products gain popularity, convenience store companies have also launched ultra-low price private brand (PB) products one after another. GS25 started handling the cost-effective PB 'Real Price,' which was sold at the supermarket GS The Fresh, from early this year, and accumulated sales exceeded 35 billion won in less than 10 months since launch. CU is also expanding the product line of its ultra-low price PB 'Deuktem' series, and sales of products priced under 1000 won from January to August this year increased by 27.3% compared to last year. Emart24 has surpassed 500 stores handling Emart's cost-effective PB 'No Brand.'