Consumers can buy duty-free products from the newly launched Shinsegae Duty Free e-commerce platform. Photo credit: Shinsegae Duty Free

Alibaba Group’s logistics network Cainiao is helping two South Korean duty-free companies reach Chinese consumers via cross-border e-commerce as the pandemic continues to weigh heavily on the travel retail industry.

Shinsegae Duty Free, one of the country’s largest travel retailers, launched an online shopping platform this week enabling overseas purchases of Korean duty-free goods fulfilled by Cainiao.

The company is following in the path of another Korean duty-free group, Shilla Duty Free, which announced its tie-up with Cainiao last month, and comes just weeks after authorities gave domestic travel retailers the regulatory green light to sell via online channels.

“With the fast development of China-Korea cross-border trade, Chinese consumers are demanding more timely delivery and better services, on top of diverse product offerings,” said Shin Jang Hwan, South Korea Team leader at Cainiao.

 Historically, Chinese tourists have been one of the largest groups of duty-free shoppers, accounting for more than 13% of sales worldwide in 2017 per estimates by Swiss research agency m1nd-set.

But the pandemic hit travel retail hard.

Global duty-free and travel retail sales fell by approximately 70% year-over-year during the second half of 2020, according to a report by retail intelligence platform Moodie Davitt and professional services company Ernst & Young.

The absence of home-bound Chinese consumers has been felt keenly in Korea. Authorities announced the launch of duty-free sales to foreign residents through online channels in July, lifting the requirement that they visit the country to purchase duty-free goods.

Cainiao is ready to deliver, with more than 15,000 square meters of warehouse space under its belt in Korea and six cargo ships and cargo planes making weekly crossings between Korea and China.

Saving A Trip

Forget Seoul airport malls and Busan shop outlets. Chinese shoppers are finding the best duty-free deals from Korean travel retailers in the comfort of their homes.

Shinsegae’s online store saves consumers a plane ticket by making more than 3,000 popular duty-free items available at the click of a mouse.

The virtual mall shines a spotlight on Korean products eligible for direct shipping, including storied beauty brands Sulwhasoo and The History of Whoo, as well as roughly 1,300 products fashion items, according to a company release.

The mall allows Chinese consumers to access quality duty-free goods at a more significant discount with guaranteed timely delivery, said Shin.

In the case of Shilla, Cainiao will also be responsible for end-to-end shipping services from South Korea to China, including local warehouse management, international delivery, customs clearance, and last-mile delivery in China.

“Our collaboration with Cainiao will help us build a complete supply chain that covers everything from sales to delivery for duty-free goods in China,” a Shilla spokesperson said in a statement.

To date, more than 5,000 brands and merchants from over 90 countries have tapped Cainiao’s inbound supply chain services to sell into China.