■Coupang Distribution Big Bang-Logistics that became the growth equation
Fast delivery of various products is a hot topic in the market
Domestic logistics facilities tripled in 3 years
Coupang has 100 distribution centers nationwide
Naver piloted AI full-filment center
Market Kurly also expanded the center for fresh food
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Until last year, there were many views in the industry that’if Coupang’s fast-competitive delivery, we will find competitiveness in other things’. However, within just a few months, the perception that’logistics is the basis for e-commerce (e-commerce)’ began to quickly establish itself. In addition, even Coupang cannot place the whole country in the’rocket delivery right’, so the distribution industry’s delivery is currently concentrated in metropolitan cities and metropolitan areas, including Seoul. The more distribution centers and the larger the delivery area is, the more sales will increase as much as the delivery capacity. The reason that the distribution industry is making large-scale investments in expanding distribution centers is because distribution has become the’growth equation’ of the distribution industry.
According to the distribution industry on the 14th, the full-filment innovation that started in Coupang has emerged not as a differentiated competitiveness of specific companies, but as a core and fundamental capability of the distribution industry. Full-filment refers to the entire process of storing, packaging, shipping, and delivering products. When an order is placed, the product is delivered directly from a large distribution center, which can greatly reduce time. It is also easy to effectively manage various products by using artificial intelligence (AI) in large distribution centers.
For this reason, facilities related to logistics have also increased rapidly in recent years. According to the National Logistics Integrated Information Center, the number of domestic logistics facilities registered as a logistics warehouse business was about 260 in 2018, but increased by nearly three times to 736 last year. This does not include facilities where retailers directly purchase, store, and sell products, so it is estimated that there are far more facilities related to actual logistics.
As the number of “capacity delivered per day (CAPA)” increases through large distribution centers, users’ satisfaction increases, which leads to an increase in transaction volume, which has the greatest impact on securing the platform’s competitiveness. An industry insider said, “Previously, the focus was on how well users can find cheaper and better products, but now how quickly and efficiently a variety of products can be delivered is becoming more important.” Investment in logistics has become an essential requirement for achieving an’economy of scale’.
The company that is making the largest investment is’Coupang’. Coupang, which entered the New York Stock Exchange with a market capitalization of KRW 100 trillion, is already operating more than 100 distribution facilities, including 10 large distribution centers in Korea. In addition, 7 additional high-tech logistics centers are currently being built in Daegu, Gwangju, Daejeon, Eumseong, Chungbuk, Gimcheon, Gyeongbuk, Jecheon, and Hamyang, Gyeongnam. The cost alone amounts to 87,000 dollars (about 973 billion won). Coupang is being evaluated for innovation in’rocket delivery’, but still some mountainous areas are delivered through existing courier companies, so same-day and next-day delivery cannot be realized. Coupang is expected to realize the work of making the whole country a’rocket life zone’ through the construction of an additional distribution center.
Naver is also working hard to strengthen logistics competitiveness. In October, Naver exchanged a stake worth KRW 300 billion with CJ Logistics, the number one logistics company in Korea, and developed’Clova Forecast’, an artificial intelligence (AI) that predicts recent logistics demand. It is being applied on a pilot basis to the’Konjiam e-full-filment center’, the largest distribution center of Express. The plan is to create a logistics demand prediction model using Naver’s vast shopping data and AI technology, and apply it to actual manpower management to improve logistics efficiency. In addition, Naver has invested about 27 billion won in full-filment-related startups such as Wikeep, Brandy, and FSS, and invested tens of billions of won in such as mesh Korea as expected to secure last mile competitiveness.
Market Kulley, a leader in fresh foods that officially announced plans to list within this year, also opened a distribution center dedicated to fresh foods in Gimpo, Gyeonggi-do last month to achieve more than doubled growth every year. As a fresh distribution center that handles food, it is the largest in Korea (a total of 25,000 pyeong), and has all of the room temperature, refrigeration and freezing centers. With the addition of the Gimpo Logistics Center, Market Curly is able to process about twice the current daily average order throughput of 90,000 cases.
11st Street is planning to launch a full-filment service based on post office delivery in the first half of the year in partnership with the post office and implement same-day delivery service. In addition, in order to reinforce its near-distance delivery capability, it has secured about 7.2% of the stake in Barogo, a logistics IT startup that operates 55,000 delivery drivers in 1,000 domestic hubs.
In addition, existing large-scale distribution companies use offline stores as PP centers rather than establish large-scale distribution centers to expand their competitiveness. SSG.com plans to expand its PP center through the renewal of its E-Mart store this year and build an additional online-only distribution center called’Neo Center’. Through this, the daily delivery volume, which is currently only 130,000, will be expanded to a maximum of 360,000 by 2025. Homeplus has begun operating a service that enables’one-hour delivery nationwide’ through 253 Homeplus Express stores nationwide.
/ Reporter Baek Ju-won [email protected]
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