Coupang, Naver strive for logistics dominance
Coupang and Naver are in fierce competition to build Korea’s largest and most efficiently run logistics network, to take the lead in the rapidly growing e-commerce market, according to company officials, Tuesday. The extent of the networks in which they operate is crucial to how fast they can deliver customers’ online orders. Both online retail giants have been adopting different strategies to expand their logistics infrastructures in various ways.
Coupang has built 140,000 square meters of packing warehouses last year alone and it plans to add hundreds of square feet more this year. Currently, it runs 3.7 million square meters of logistics and processing centers in the country.
The online retailer also started a third party logistics service in 2021. It acquired a license from the government to run a logistics business with its subsidiary, Coupang Logistics Service (CLS). For now, CLS manages the operations of Coupang’s overnight delivery service.
Coupang has already firmly established itself in the online shopping market by offering an unprecedented overnight delivery service. Still, it plans to build more fulfilment centers to maintain its top position in delivery services. “We signed a memorandum of understanding with 10 local governments to build large warehouses last year. We estimate 1.5 trillion won of investment,” a Coupang official said.
Naver, on the other hand, has chosen to collaborate with local logistics firms. It established the Naver Fulfilment Alliance (NFA) with the country’s largest logistics firm, CJ Logistics, by swapping each other’s stocks last year.
Naver is unique in the online retail business. It outsources its delivery service to specialized logistics firms.
CJ Logistics has its hub warehouses in Gonjiam and Gunpo, both in Gyeonggi Province. Many of the online purchases ordered from Naver are delivered from those two CJ Logistics’ facilities, and customers can get their items within a day if the order was placed before midnight.
Naver is in the process of expanding its partnerships with other logistics firms, such as OurBox, Mesh Korea and Techtaka. OurBox specializes in delivering frozen foods. Mesh Korea operates Vroong, which has an advantage in “last mile” delivery service, or the movement of goods from a distribution warehouse to their final destination. Techtaka runs a service named Argo that manages online order and stocking services within the order-to-delivery process.
“We have formed an alliance with a number of logistics firms here to offer various choices to our sellers when delivering their items. Each of the companies specializes in delivering different types of items and we want to establish our competency by offering differentiated logistics services,” a Naver official said.