E-commerce industry is focusing on consumers’ dining tables. As services that deliver food faster, fresher, and cheaper than its competitors makes its appearance one after the other, more consumers are beginning to purchase their food online.
Major online and offline distributors are doing everything they can to secure customers by introducing services such as ‘Early-Morning Delivery’ that are specialized for food. They are also focusing on securing infrastructures such as ‘cold chain system’ to maintain the freshness of food at its maximum. ‘Food’ has emerged as the biggest battlefield for the South Korean E-commerce industry.
◊Early-morning delivery service to be the biggest ‘battlefield’ for the E-commerce industry
E-commerce industry is working on differentiated services to secure online demands for food. ‘Early-morning delivery’ is a prime example. Because this service delivers fresh food by the next morning even when an order is made overnight, it is drawing more users centered on single household and working couple.
According to the distribution industry, South Korea’s early-morning delivery market was worth about $341 million (400 billion KRW) last year when it was worth $162 million (190 billion RRW) the year before. It is estimated that the market will be worth at least $683 million (800 billion KRW) as various E-commerce companies enter the market.
MARKET Kurly, which established the concept of ‘early-morning delivery’ for the first time in South Korea, currently provides ‘Morning Star Delivery’ service for Seoul, Gyeonggi, and Incheon. This service will deliver food before 7 A.M. of the following day when food is ordered before 11 P.M. Market Kurly provides free delivery service for customers who order more than $34.13 (40,000 KRW) worth of food and it induces a large purchase.
MARKET Kurly made $134 million (157.1 billion KRW) in sales last year. Compared to its sales in 2015 when it made $2.47 million (2.9 billion KRW), its sales jumped up by 55 times. Its performance improved even more when its ‘Morning Star Delivery’ service in May of last year. Out of 10,000 items that MARKET Kurly is currently handling, 80% of them are related to food.
“While maintaining the quality of our Morning Star Delivery service, we are continuing to put in investments into making our distribution more effective in order to expand the quantity of delivered goods.” said a representative for MARKET Kurly.
Other up-and-coming companies are also coming out with differentiated services. Coupang launched ‘Rocket Fresh’ in October of last year and it is delivering about 5,200 items through Rocket Fresh.
One has to order an item before 12 A.M. through Rocket Fresh in order to receive that item before 7 A.M. of the following day. Coupang has enhanced the level of convenience for its customers by making the deadline for an order one hour later than MARKET Kurly.
SSG.COM that works with e-mart and others has also joined the company of early-morning delivery service providers. It launched its own service in June and it has been handling about 5,000 orders per day with 22 boroughs such as Seoul and Gyeonggi at the center. It is estimated that the total number of orders SSG.COM has received and will receive by end of this year will be about 700,000.
One can expect to have an item delivered by 6 A.M. if he or she places an order by 12 A.M. Its delivery time is one hour faster than that of Coupang.
TV home shopping malls are also providing their own early-morning delivery services. Lotte Home Shopping opened ‘SaeLot Delivery’ service within its online shopping mall ‘Lotte i Mall’ in July. Its service will deliver fresh food, snacks, and household items by 7 A.M. if one places an order by 6 P.M.
“Competition for ‘last mile’ within the E-commerce industry that had developed centered on industrial products has now shifted towards ‘early-morning delivery’ of food and groceries.” said a representative for the industry. “The industry will continue to look to secure infrastructures for delivery such as distribution center for food.”

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<SSG.COM’s early-morning delivery service>

◊E-commerce industry tries various ways to maintain freshness
The E-commerce industry had categorized food as high-risk product in the past due to a possibility of food going bad depending on storage condition during delivery process and a limitation in disposing what is left in stock. Considering the fact that it requires significant amount of money to build distribution infrastructure for food is also another reason why there had been low accessibility towards food.
However, the industry has recently introduced a storage technology that can store fresh food for a long period of time and ‘cold chain’ system that delivers fresh food to customers as it is. IT and distribution network also act as a foundation for online food distribution market.
MARKET Kurly is operating a ‘full cold chain’ system. Full cold chain system applies appropriate temperature to every process in order to maintain the freshness at the maximum. MARKET Kurly is also carrying out its own distribution policy that changes its packaging and storage methods depending on a change in temperature.
It is currently operating a distribution center in Jangji-dong (comprehensive), Namyangju (freezer), and Jukjeon (room temperature) and it is planning o open another comprehensive distribution center in Gimpo next year.
Homeplus set up a ‘store fulfillment center (FC)’ at its Gyesan store in July of last year and Anyang store and Woncheon store this past August. Its FC is basically an online distribution center attached to a supermarket. While reducing time, cost, and maintenance fee that go into constructing a FC by using assets of a current store, FC carries out quick delivery.
As a result, it is estimated that Anyang store and Woncheon store will handle 1,500 online deliveries per day when they used to handle 200 deliveries in the past. One picker will now handle 30 orders when it used to be 22 orders. Homeplus is planning to expand online distribution ability, which is now available for 107 stores, to all 140 stores by 2021.
“50% of freshness comes from farm while other 50% comes from efficiency in operation.” said CEO Lim Il-soon of Homeplus. “We are doing everything we can to maintain optimal quality and to have competitive cost at the same time.”
LOTTE Super is currently operating 18 online order delivery centers called ‘Fresh Center’. In March, it became the first South Korean company to introduce 19 AI (Artificial Intelligence) picking robots to its Auto Fresh Center in Uiwang.
Level of efficiency in operation has increased threefold after it introduced AI robots because 3 AI robots are equivalent to 10 people. In the past, Auto Fresh Center in Uiwang had handled 650 online deliveries on average per day. Now, it is estimated that the number will increase to 1,500 deliveries.
Staff Reporter Yoon, Heeseok | pioneer@etnews.com