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◇ IT company, not logistics
According to the delivery hero (DH) disclosure data on the 21st, the company’s cumulative delivery orders received worldwide by the third minute of last year amounted to 88.8 million, a double (95%) increase from the same period last year. By region, in Asia, there were 455,500,000 cases in the same period, accounting for half of the total. Compared to the same period of the previous year, it increased more than three times (228%).
Regarding this, an official from Ua DH Asia said, “In Asian orders, Korean’Yogiyo’ orders account for half. It is safe to look at the Korean market that has led the growth in the number of orders last year.” Considering Baemin, who has more than twice the market share than Yogiyo, last year’s delivery market in Korea is estimated to have expanded twice as much.
The background of the delivery (delivery) industry standing out in Korea is the advanced service. It is for this reason that delivery application (app) providers such as Baemin and Yogiyo and delivery agencies such as Barogo and Vureung define themselves as information and communication technology (IT) companies. Delivery relaying and agency is just one of the services, and the essence of the service is IT.
The’Artificial Intelligence (AI) recommendation dispatch’ developed by Bae Min is a representative example. The best route is provided to Baemin riders (delivery drivers), and delivery is easy only when time is shortened, so that consumers are satisfied. The same is true of Mesh Korea’s’Vureung’. Technology was poured in to create a’distribution system optimized for delivery’. In this way, early morning, same day, and designated delivery service followed. With the advancement of delivery, the items diversified. If you order fresh food such as vegetables or seafood, you can put it on the table the next morning. In the past, they couldn’t maintain freshness, so delivery was something I couldn’t even dream of.
The same goes for the e-commerce market. As a factor for Coupang’s success, it cannot be excluded that delivery was not outsourced (courier) and internalized (coupang friend). When the rocket delivery service started in 2014 (arriving the day after ordering), everyone said that it was’reckless’, but now it has become a daily routine until’dawn delivery’. In the meantime, it has compared its shoulder to eBay Korea (G-Market Auction), which left the delivery to the outside.
In the background, there is a service full-filment that takes over the beginning and end of logistics such as warehousing, packaging, delivery, and inventory management. Although it can’t handle the entire delivery, it’s a system in which systems, not people, work.
Even if you look at Coupang Chairman Kim Bum-suk’s comment (excerpt from’Coupang, Why We Innovate’), “a world where everything is based on software and you cannot do business without knowing it,” you can see how much IT values the company.
An excellent professor at the Department of International Logistics at Chung-Ang University said, “As delivery service is advanced through logistics innovation, consumer needs are focused on time rather than products and brands.” “Delivery service is a brand that secures customer loyalty beyond providing convenience. It’s done.”
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The result of turning weakness into strength
This is the background of the current five Koreans carrying Coupang and one with Baemin on their smartphones. As of July and August of last year, as of July and August of last year, mobile data analysis company IG Works recorded 22.4 million smartphone devices and 10.66 million smartphones with coupang installed. Last year, the Korean population was 5,178, so this analogy is not too much.
However, it is difficult to view the achievements achieved simply by upgrading services. The combination of Korean characteristics and the benefits of Corona 19 cannot disregard the side that created synergy.
The narrow territories and high population density were the driving forces to boost delivery efficiency. It was an environment suitable for implementing the service by absolutely reducing the delivery distance. Korea is also the third largest in the world (based on countries with more than 10 million people) and has a high population density. The efficiency increased by placing multiple items on short distance delivery. An official from the early morning delivery company said, “If we had started our service in the US, we would not have guaranteed success.”
It is also interesting to try to find background in Korean eating habits. Even though social distancing was prevalent, the current of dependence on eating out did not break. Frequent dinners during overtime and non-night work moved to home. In the process of eating out into the interior, it was delivery and delivery that set the stepping stone. The increased number of single-person households relied heavily on eating out, and their return to eating out is also considered a driving force that boosted the industry.
Inexpensive labor cannot be left out. There are several countries that have the conditions for the expansion of the delivery and delivery industry as much as Korea. For example, the Netherlands in Europe has a narrower territory than Korea, and its population density is dense (5th), but its national income is much higher. The difference between the two countries is labor costs. Looking at the monthly minimum wage (based on 40 hours per week), Korea (1.28 million won) is 23% cheaper than the Netherlands (2.25 million won, 1684 euros). This is in contrast to the fact that Korea ($1.642 trillion) is 80% larger than the Netherlands ($909 billion) in terms of gross domestic product (GDP and World Bank 2019).
Earlier, Professor Woo said, “It is a matter to consider whether the labor cost in Korea is relatively appropriate, but it is absolutely low compared to Europe or the United States. There is a side that has led to industrial development by securing delivery personnel at low cost.”
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