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Logistics investment continues as e-commerce war wages on

From next morning delivery of grocerys to a tech-powered shipping platform for small merchants, e-commerce expansion spurs innovation in parcel delivery

A worker at CJ Logistics' e-fulfillment center is scanning an item. (CJ Logistics
A worker at CJ Logistics' e-fulfillment center is scanning an item. (CJ Logistics
More e-commerce platforms are rushing to offer early morning delivery outside of Seoul to win the nation-wide grocery delivery war that has been sparked by Market Kurly and Coupang.

Shinsegae Group’s online retail channel SSG.com began expanding dawn delivery in several major cities in North and South Chungcheong Province this week, including Cheongju, Cheonan and Sejoing City. The company has said it plans to expand the service to the rest of the country in the future.

Entering the region two years after launching its early morning delivery service, the move marks the first time the platform will provide the service outside the Seoul metropolitan area.

By building a cold chain distribution center in Cheongju, which works in connection with its online store distribution center in Gimpo known as “NE.O,” SSG.com will be able to deliver items within hours to the region.

“We are glad to finally provide early morning delivery to customers in the Chungcheong region,” said Kwak Jung-woo, the head of the operations department said.

“By expanding the coverage region and increasing supply, we plan to make our early morning delivery service available to more people,” Kwak said.

The move comes as Coupang, the country’s second largest e-commerce platform following Naver, has invested over 1 trillion won ($873.9 million) in distribution centers in regions across in the country so far this year alone, including in North Jeolla, South Gyeongsang, North Chungcheong and Busan. Coupang currently remains the only platform in the country able to provide early morning delivery on a nationwide scale.

The combined size of its distribution centers amount to an equivalent of 100 football stadiums, according to the company.

Fresh food delivery service Market Kurly, an online grocery startup which first introduced the concept of dawn delivery known as “Saetbuyl delivery” to the country, also announced plans to expand early morning delivery in the southern region later this year.

Having raised investment of 225.4 billion won in a round of Series F funding from investors such as Global asset manager Millennium Management and local logistics giant CJ Logistics, the platform is expected to benefit from a synergy in distribution.

In April, Market Kurly signed a memorandum of understanding with CJ Logistics to extend its early morning delivery service in the Chungcheong region.

Also on Tuesday, Naver launched a new platform designed to reduce the burden of logistics management on small online sellers.

Named Naver Fulfillment Alliance, the platform brings several domestic fulfillment firms together to provide shipping solutions to the e-commerce’s many small, and fragmented players.

Naver itself has around 450,000 online retailers on its Smart Store platform.

A fulfillment service refers a third-party warehouse service that prepares and ships a store’s orders. Companies that have joined the platform include CJ Logistics, OurBox, WeKeep, Fassto, Poomgo and Dealibird.

Using artificial intelligence algorithms, Naver Fulfillment Alliance enables merchants to manage the entire process of packaging, delivery, inventory management, defective product inspection, management of returned products and other customer services.

On the platform, the sellers can find and select a delivery partner that fits their product types and preemptively plan on the logistics processes and costs.

For example, an ice cream seller can choose a fulfillment partner specialized in delivery of frozen food products. Before, each online retailer had to find suitable logistics firms cost-wise and quality-wise on their own.

Naver further plans to support fulfillment service providers, including short-distance delivery firms, with its AI technologies that can predict demand and provide better solutions.

“Naver has been providing a variety of technologies to support the online store and payment platforms, and NFA is an extension of the efforts,” said Kim Pyung-song, leader of the logistics platform service at Naver. “The company will continue efforts to develop on-demand logistics services to around 450,000 smart stores and add diversity to the logistics ecosystem.”

The tech giant also plans to utilize data from the logistics business to develop new businesses, such as an advisory system for logistics services.

By Song Su-hyun (song@heraldcorp.com), Yim Hyun-su (hyunsu@heraldcorp.com)
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