November 21, 2024

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Chinese e-commerce giant AliExpress has chosen to solicit open competitive bids in Korea instead of extending its delivery contract with CJ Logistics, set to expire in April.

According to industry sources Thursday, AliExpress recently submitted bid proposals to major logistics firms here to handle customs clearance and parcel delivery services.

The new contract period, which reportedly spans one year from May, is seen as AliExpress' cost-saving measure, according to sources.

In addition to its aggressive marketing strategies and competitive pricing, Ali recently unveiled plans to invest $1.1 billion in Korea, with $200 million designated to establish a massive fulfillment distribution center within this year.

"For a while, there will likely be a surge in orders from Korea due to rather shocking low-cost product promotions, but few places possess sufficient logistics expertise to accommodate such amount," a competing domestic e-commerce firm's official said on condition of anonymity.

"It appears that they (AliExpress) deemed logistics as the primary area for cost reduction before reassessing their high marketing expenditures. While experiencing such rapid growth, it would at least have been advantageous to engage in constructive discussions with CJ Logistics who they have worked with, perhaps by negotiating discounts as the volume of parcels increase. However, talks seem to have faltered between the two."

According to local media reports, the bidding documents presented by AliExpress suggest an estimated parcel volume of approximately 12.35 million between March 2024 and March 2025. Consequently, it is believed that among domestic companies, CJ Logistics, Hanjin and Lotte Global Logistics have the capacity to manage such a volume. Since AliExpress declined to extend its existing contract with CJ Logistics, industry insiders expected a showdown between Lotte Global Logistics and Hanjin.

However, a CJ Logistics official denied any conflicts with AliExpress, asserting that CJ Logistics is also participating as an open bidding competitor.

"We are actually anticipating positive results despite slight alterations in the bidding process," a CJ Group official said.

Industry officials indicate that even without AliExpress, the major aforementioned logistics firms in Korea already handle significant parcel volumes from other clients. Furthermore, engaging in bidding at discounted rates for AliExpress may result in future losses, which could also explain why firms might not be as proactive in their participation.

By Kim Hae-yeon (hykim@heraldcorp.com)
The Korea Herald