Alibaba eyes 1st investment in Korean e-commerce platform

China's Alibaba Group Holding Ltd. is likely to make its first investment in a South Korean online shopping platform as it aims to gain a competitive edge in the country, one of the world's largest e-commerce markets and increasingly encroached on by Chinese players such as Temu and Shein.

According to banking sources on Monday, Alibaba is in talks with Ably Corp., the operator of Korea’s No. 1 women's clothing shopping app Ably, to invest 100 billion won ($72.4 million) for around a 5% stake.

“Alibaba, which has been a major platform to export Chinese manufactured goods, will open a way to expand its sales in Korea and other markets by combining the fashion of Dongdaemun (Korea’s largest fashion wholesale marketplace) with made-in-China products,” a retail industry official said.

Ably, valued at around 2 trillion won, eyes another 100 billion won investment from global investors such as Canadian pension giant Ontario Teachers’ Pension Plan, UK private fund manager Permira and Luxemburg-based CVC Capital Partners, added banking sources.

 
NO. 1 FEMALE FASHION PLATFORM

Alibaba’s investment will expand its Korean business via AliExpress, as well as strengthen its influence in the fast-growing Korean shopping platform, market watchers said.

Since 2020, the Chinese tech giant has sought to acquire a smaller peer in Korea, one of the world’s largest e-commerce markets. It considered buying SK Square Co.’s online shopping platform 11Street last year but didn’t finalize the deal.

Alibaba talked with most of the Korean e-commerce platform operators with over 100 billion won in revenue for an acquisition deal last year, except for Naver Corp. and Coupang Inc., an industry source said.

Ably received Alibaba’s choice as the women’s fashion platform has a competitive edge in attracting female users. The number of female monthly active users (MAUs) in Ably surpassed 7 million in March, more than double its crosstown rivals Musinsa and Zigzag.

FAST GROWTH

According to mobile data research firm Wiseapp, Ably’s 8.05 million MAUs topped Korean online fashion platforms last month. Of online shopping apps in Korea, it ranks fourth following Coupang’s 30.86 million, AliExpress’ 8.87 million and Temu’s 8.29 million, and is followed by 11Street’s 7.4 million and Gmarket Inc.’s 5.48 million.

Founded as a Dongdaemun market sellers’ online marketplace in 2018, Ably surpassed 1 trillion won in cumulative transactions in 2020 and manages more than 50,000 sellers, the largest number for a Korean shopping app.

As Coupang did in its growth stage, Ably has spent significant capital on marketing to attract users in its early days.

As a result, Ably posted 69.4 billion won and 74.4 billion won in operating losses in 2021 and 2022, respectively.

It logged a capital erosion of 54.5 billion won as of the end of 2023, led by 112.9 billion won in total assets and 167.2 billion won in liabilities. The app operator posted a surplus for the first time last year, with 3.3 billion won in operating profit.

Write to Hyung-Joo Oh and Jae-Kwang Ahn at ohj@hankyung.com

Jihyun Kim edited this article.