Alibaba continues eyeing S.Korean e-commerce M&A

Chinese tech giant Alibaba Group is seeking to purchase a major online retail platform in South Korea, one of the world’s largest e-commerce markets, according to banking sources on Wednesday.

Alibaba, which once considered acquisition of SK Square Co.'s 11Street, has been in talks for months with investors in Korean online shopping platforms like TMON Inc., W Concept Co. and Ably Corp., sources said.  

Alibaba is aiming to reshape the fast-growing Korean e-commerce market via mergers and acquisitions, sources familiar with the matter said. Korean online retail players’ values soared during the pandemic and have plunged due to fierce competition, and Alibaba views it as the right moment to buy one cheap, sources said.

“There is a possibility of upheaval in the Korean e-commerce market if Alibaba expands its presence with M&As. We might see a crack in the firm structure of the market, which is dominated by Coupang Inc., Naver Corp., Musinsa Co. and Kurly Inc.,” an industry source said.

Until mid-September, the Chinese online retail behemoth had been pushing to buy 11Street, an e-commerce platform within SK Group’s investment arm SK Square. Alibaba has suggested SK Group maintain a 20-30% stake in 11Street and co-manage the Korean online shopping platform, according to sources.

The SK-Alibaba deal fell through as SK Group was concerned about negative publicity on Korean capital outflow to China and Singaporean firm Qoo10 Pte. offered a favorable deal to SK in October. 

Alibaba is attracting Korean online shoppers with a broad assortment of products at modest prices. In July, it launched an express cargo shipping service between Korea and China to meet a surge in orders.  

AliExpress, an e-commerce platform under Alibaba, entered Korea in 2018 and ranked third following Coupang and 11Street last month in terms of the number of monthly active users, according to Korean app market research firm Wiseapp.  

In March, AliExpress announced it will invest 100 billion won ($76.8 million) in its Korean business this year.

Write to Ji-Eun Ha at hazzys@hankyung.com

Jihyun Kim edited this article.