The onslaught from Chinese e-commerce giants including AliExpress and Temu has spurred South Korea’s retail industry to enter a survival competition by leveraging fast delivery.

According to industry sources on Tuesday, Coupang Inc. announced plans to invest 3 trillion won ($2.2 billion) in March to operate additional fulfillment centers in eight regions nationwide, including Ulsan, Daejeon, Gwangju, and Gimcheon.

The company plans to start operations in Daejeon and Gwangju fulfillment centers this year, with plans to begin construction in Busan, Icheon, Gimcheon, and Jecheon by 2026.

Coupang’s plan through the expansion of fulfillment centers is to essentially make the entire country eligible for rocket delivery by 2027.

It aims to upgrade delivery services to the point where even regions with populations of fewer than 30,000, facing extinction due to aging populations, can receive items on the same day they are ordered.

“Investing in rocket delivery to low-birth regions with low profitability is a desperate response by Coupang to fend off the market invasion by Chinese shopping apps,” said a Coupang official.

“Coupang’s recent hike in membership subscription fees appears to be an unavoidable choice to respond to the onslaught of giant e-commerce companies from China,” said an industry insider.

Naver Corp. has been strengthening and expanding benefits for its arrival guarantee service, launched in December 2022.

The service provides consumers with the exact arrival date and compensates them with Naver Pay points if the items are not delivered within that time frame.

Naver recently announced the start of same-day and Sunday deliveries for arrival guarantee service items. This will initially apply to about 50 percent of all arrival guarantee items and will expand nationwide from next year, starting with the Seoul metropolitan area.

Naver began enhancing its delivery competitiveness by providing a fast delivery items smart block in Naver Shopping’s integrated search results in January.

The smart block service provides customized information in block form tailored to user preferences.

Consumers who want fast delivery, either on the same day or the next day, can select it during the ordering process.



SSG.com of Shinsegae Group has also added SSG One Day delivery, focusing on fresh and processed food, in addition to its existing same-day delivery service, SSG Delivery. Orders placed by 11 p.m. will be delivered the next day.

However, the prevailing observation is that it will be difficult for domestic companies to overcome Chinese e-commerce companies, which leverage huge financial resources and cheap labor within China to produce goods.

Given the speed with which Chinese companies have emerged as winners overseas in just 1-3 years, it is highly likely that the battle in Korea will be decided in the next few years.

AliExpress has pledged to invest $200 million to complete an 180,000 square meter fulfillment center in Korea this year.

Industry insiders raise doubts about how long the delivery superiority of Korean companies can be sustained.

By Park Hong-ju and Minu Kim

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]