Distribution Industry, Despite Poor Performance, Takes Initiative for Shared Growth by Early Payment of Delivery Fees

On the 17th, ahead of the Lunar New Year holiday, Jungbu Market in Jung-gu, Seoul, is bustling with citizens. Photo by Moon Honam munonam@

[Asia Economy Reporter Seungjin Lee] The distribution industry, which experienced a decline in performance last year, is promoting mutual growth by making early payments for delivery fees ahead of the Lunar New Year.

Lotte has made early payments of approximately 820 billion KRW in delivery fees to help partner companies manage their finances during the Lunar New Year holiday. This measure takes into account that small and medium-sized partners temporarily require significant funds for salaries and bonuses during the holiday period.

Despite experiencing a decline in performance last year in traditionally strong sectors such as Lotte Shopping and Lotte Chemical, Lotte increased the scale of early delivery fee payments this year. The early payments made during last year’s Lunar New Year period amounted to 800 billion KRW, an increase of over 20 billion KRW.

Thirty-three companies including Lotte Department Store, Lotte Information & Communication, Lotte Global Logistics, and Lotte Chilsung Beverage participated in the early payment, benefiting about 19,000 small and medium-sized partner companies. Lotte plans to pay all fees by the 21st, three days before the holiday, which is on average about 13 days earlier than usual.

Homeplus also decided to make early payments amounting to approximately 93 billion KRW. However, both the scale and funds have decreased due to the decline in performance.

The early payment target companies are about 2,900 small and medium-sized partner companies excluding large corporations, with early payments totaling about 93 billion KRW. Homeplus plans to pay these fees collectively by the 22nd, eight days earlier on average than the normal payment date, before the Lunar New Year holiday.

Last year during the Lunar New Year, Homeplus made early payments of about 200 billion KRW to around 3,800 small and medium-sized partner companies.

Shinsegae Group affiliates such as Shinsegae Department Store and E-Mart are also coordinating the scale and schedule of early delivery fee payments. However, it is reported that the amount of early payments has decreased compared to last year.

An industry insider said, "Last year, as a cold wind blew across the distribution industry, programs such as providing gift certificates to partner company employees or supporting transportation costs for returning home were reduced. Nevertheless, each distributor is making efforts to stimulate consumption and promote mutual growth."

A representative from the Federation of Korean Industries Small and Medium Business Cooperation Center explained, "Early payment of fees is a necessary measure especially for second- and third-tier partner companies rather than first-tier partners. With bonuses paid ahead of the Lunar New Year, it will play a significant role in revitalizing the domestic economy during the holiday period."