[Sangsagiro]② Shein's 'Ultra-Low Price' Blitz Returns... Impact Unavoidable Even With Alibaba's Backing

Shein Sees User Surge as Ultra-Value Consumption Spreads
Ably Shares Core Customer Base with Shein
Ably Ranks First in Counterfeit Detections Among Fashion Platforms

Chinese fashion platform SHEIN, which has adopted an 'ultra-low price' strategy, has been tightening its grip on the Korean market this year, causing renewed turbulence in the fashion industry. While domestic small and medium-sized fashion platforms, including Brandi, have already entered corporate rehabilitation procedures one after another, even the leading companies are on high alert. In particular, there are predictions that Ably, the largest women's fashion platform in Korea, which has received investment from China's largest e-commerce company Alibaba Group, will inevitably be hit as its customer base overlaps with that of SHEIN.

According to WiseApp Retail, a mobile app analytics service, as of August, SHEIN's monthly active users (MAU) reached approximately 2.62 million, a 258% surge compared to about 730,000 in the same month last year.

SHEIN, which owns the world's largest SPA brand, has been expanding its business by operating a fashion platform, focusing on the United States and Europe. However, as regulatory moves intensified after the launch of the Trump administration in the United States, SHEIN began turning its attention to the Asian market. Last year, SHEIN officially announced its entry into Korea by opening a pop-up store in Seongsu-dong, Seoul, but it did not attract much attention due to quality controversies. However, as high inflation and economic stagnation have persisted, the number of users has been rapidly increasing this year.

During this period, the domestic fashion platform Zigzag saw its MAU grow by 22.8%, from about 2.96 million to 3.26 million, while Musinsa and Ably posted growth rates of only 8.7% and 9.7%, respectively.

SHEIN's Average Order Value at 56,000-67,000 KRW... 'Bose Fashion' Ably Under Threat

Industry insiders predict that Ably is bound to be affected, as SHEIN's core customer base overlaps with its own. Ably, which competes with Musinsa for the top spot in user numbers among domestic fashion platforms, recorded an estimated monthly credit and debit card transaction amount of 40 billion to 60 billion KRW this year. In contrast, Musinsa, with a similar MAU, saw transaction amounts of around 150 billion KRW, about three times higher than Ably's monthly transaction volume.

This difference is attributed to the average order value per user on each platform. So far this year, Musinsa's average payment per user ranged from 94,000 KRW to 127,000 KRW, while Ably's remained at 66,000 KRW to 78,000 KRW. The gap in average order value reaches up to twice as much. This is due to the difference in their main customer bases. Musinsa covers female and male consumers in their 20s to 40s, whereas Ably's main customers are women in their teens and 20s, who generally have less purchasing power.

SHEIN's average payment per user this year is between 56,000 KRW and 67,000 KRW, which is about 10,000 KRW less than Ably. This is why SHEIN's expansion in the Korean market poses a threat to Ably.

Chinese Alibaba Invests 100 Billion KRW in Korean Platform Competing with SHEIN

Previously, in December last year, Ably received a 20 billion KRW investment from Alibaba, the Chinese capital giant. At that time, Alibaba spent 80 billion KRW on the purchase of existing shares and 20 billion KRW on new shares. Lei Zhang, CEO of Aliexpress Korea, serves as a non-executive director on Ably's board.

At the time, Alibaba's investment was interpreted as a move to join forces with Ably and respond to the expansion of competing platforms, as SHEIN and Temu were strengthening their presence in the Korean fashion market.

However, there are still criticisms that concrete collaboration between Alibaba and Ably has yet to materialize. An industry insider from a fashion platform commented, "Alibaba chose Ably as an investment destination because it possesses customer data and operational know-how, which are essential for strengthening competitiveness in the fashion sector that requires expertise and curation. However, while SHEIN is growing rapidly, there have been no visible results from the strategic investment between Alibaba and Ably."

271 Cases of Counterfeit Goods Detected in the Past Two Years

The increasing number of counterfeit goods is also a burden for Ably. Counterfeits are directly linked to a platform's credibility, and it is pointed out that it is not easy for Ably to differentiate itself from SHEIN, which has faced repeated controversies over fake products.

According to data submitted by the Korea Intellectual Property Protection Agency to Assemblywoman Oh Sehee of the Democratic Party, a member of the National Assembly's Trade, Industry, Energy, SMEs, and Startups Committee, Ably had the highest number of counterfeit detections among fashion platforms (Musinsa, Brandi, Zigzag, Ably). Crackdowns on fashion platforms have continued since last year, with Ably recording 160 and 111 counterfeit detections last year and this year (up to August), respectively.

Following Ably, Brandi had the next highest number of counterfeit detections, with 110 and 24 cases during the same period. Zigzag recorded 10 and 55 cases, while Musinsa had 3 cases last year. Ably, which grew based on Dongdaemun's Bose fashion, is believed to have seen a large influx of products from Chinese wholesalers, leading to the high number of counterfeit detections. The large number of sellers on Ably compared to other platforms is also thought to have contributed to this.

Earlier this year, Ably was also sued by British fashion brand Charles Jeffrey Loverboy for allegedly aiding and abetting trademark infringement. The brand's signature product, the 'Chunky Rabbit Beanie,' featuring rabbit ears, gained global popularity, and hundreds of counterfeits bearing the same trademark were reportedly sold on Ably.

In response, an Ably representative stated, "Ably operates as an open market encompassing various categories, including fashion, beauty, and food, and compared to the overall open market category, the level of management is relatively low. This year, we have strengthened our reporting channels by establishing a dedicated page for intellectual property infringement reports."