Korea’s largest retailers forced to think about delivery services

South Korea’s largest retailers are having to invest in logistics to cope with rising online spending and personalized delivery services.

South Korean online shopping malls Coupang and Market Kurly have led the paradigm shift in the delivery industry after introducing the early morning delivery service, which has led many to adjust to the new and more convenient ways to purchase goods.

Large brick-and-mortar retailers can no longer wait for the customers to visit their store.

Homeplus, a South Korean hypermarket chain operator, said this week it has opened two fulfillment centers, located in Anyang and Suwon, Gyeonggi Province to provide better online delivery services.

In a 6600sqm logistics center, pickers collect products in a tray to ship them for online orders. A Digital Picking System informs the picker on which tray to use, where the product is located, and the final results of the picking process.

Homeplus plans to improve 140 stores across the country with enhanced capabilities for online shopping and delivery by 2021.

SSG.com, Shinsegae Group’s online marketplace, currently runs NE.O, logistics centers for online shopping located in Yongin and Gimpo. NE.O will open its third center in Gimpo later this year.

SSG.com is also in charge of receiving orders at E-mart’s picking and packing centers as part of a two-track strategy.

Lotte Mart plans to expand its logistics centers for online shopping to meet the rising demand from the online community.

Lotte’s signature delivery service is same-day nighttime delivery service. If a customer places an order before 8pm, the product will be delivered before midnight on the same day.

As such, large offline retailers are now in competition over expanding logistics centers for online shopping, which may turn out to be the only way to outlive the ‘delivery war.’

But for South Korea’s largest retailers, building separate logistics centers for online shopping may also provide stores with a wider leeway since offline malls are subject to various restrictions, including mandatory business holidays.