[ANALYSIS] Pandemic fuels competition for quick delivery in ecommerce market

By Lim Chang-won Posted : June 5, 2020, 17:44 Updated : June 5, 2020, 17:44

[Courtesy of Coupang]

 
SEOUL -- A coronavirus pandemic has caused an irreversible change in the pattern of consumers in a country well-known for an ultra-fast mobile telecom network. Social distancing, an act of not engaging in social activities or not visiting populated places, has settled as a social trend, prompting companies to accelerate the introduction of non-face-to-face operations using digital technology.

Offline stores have been heavily affected by the country's rapidly growing e-commerce industry partly thanks to the increasing number of single households and young workers who wish to save time shopping. The trend is visible this year as South Korea's distribution market rapidly shifts from offline to online in the aftermath of a COVID-19 that sparked fierce competition in the ecommerce industry.

Delivery and ecommerce companies in South Korea regard "speed" as a command for survival and try hard to introduce competitive services that enhance consumer convenience.

"Competition for quick delivery is getting fiercer as the pattern of non-contact consumption is quickly settled due to a prolonged COVID-19 situation, an official from a retail conglomerate said. "Companies are instinctively aware that winning this competition will allow them to exert influence in the market for a long time in the future."

Analysts agree that intensifying speed competition is inevitable, along with the quality of delivery and the application of various content to securing competitiveness.

"Delivery competition among retailers is inevitable, whether they like it or not," said Suh Yong-gu, a professor of business administration at Sookmyung Women's University in Seoul. "Right now, the retail market faces a major revolution. Companies that turn a blind eye to this trend will naturally fall behind."

Initially, stores with excellent locations had been strong, but they gave way to large marts that emphasized the quality of their products, Suh said, adding that in the early days of e-commerce, cheap products were well received. "Companies that catch the transformation period well have been able to survive in the market. This is the era of e-commerce, and the level of products among companies has all been raised."

Suh said companies with a fast and reliable delivery system would win after all in the era of last-mile delivery. "The retail industry will face the 'Last-Mile Delivery War' for at least five years," he said, urging companies to secure a competitive edge by introducing new technologies. "For example, if a company introduces a fourth industrial element that can enhance the convenience and safety of consumers in its delivery function, it will secure more favorable responses from consumers."

Ecommerce operators agree that they must provide services reflecting the timing, situation, and taste of consumers by utilizing artificial intelligence and big data and strengthening communication between businesses and consumers.

South Korea's top ecommerce company Coupang, known as the Korean version of Amazon, has grown fast with slashed prices and a swift "Rocket" delivery system. Market Kurly, the operator of an overnight online grocery delivery service, has been favored by housewives and businessmen who have no time to shop for groceries at offline stores. The online store quickly delivers fresh grocery items to doorsteps early in the morning.

Other ecommerce companies including SSG.com, an online shopping platform run by South Korea's retail group Shinsegae, followed suit with quick delivery. Retail giants such as Lotte are also strengthening their delivery functions as they feel a clear limit on their offline profit model. Homeplus, a discount store retail chain, has partnered with local food delivery service Yogiyo to provide a one-hour grocery delivery service.

(This article was contributed by Aju News reporter Kim Choong-beom)
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