Coupang Logistics Centers Shut Down One After Another... Concerns Over Delivery Disruptions Spread
[Asia Economy Reporters Kim Cheol-hyun and Moon Hye-won] Concerns are rising that some disruptions may occur in delivery and other services, which Coupang has touted as its strengths, following the closure of the Goyang logistics center after the Bucheon logistics center was shut down due to confirmed cases of the novel coronavirus infection (COVID-19). So far, there have been no reported delays in Rocket Delivery, but if the number of confirmed cases continues to increase and more logistics centers are closed, cracks could inevitably appear in Coupang’s Rocket Delivery system, which has been the foundation of its growth.
According to industry sources on the 28th, the closure of the Goyang logistics center has put Coupang’s logistics system on high alert. Goyang is one of Coupang’s largest logistics centers, responsible for key areas in the Seoul metropolitan area. Coupang operates a total of 168 Rocket Delivery centers nationwide, with 24 large logistics centers.
◆Will Coupang’s Core Competitiveness Be Hit? = The problem is that on this day, Gyeonggi Province issued a two-week assembly ban order, effectively a business suspension, for the Bucheon logistics center handling fresh food, and the Goyang logistics center was also closed, increasing the likelihood of disruptions to Rocket Delivery. Furthermore, if concerns spread about the vulnerability of logistics centers to COVID-19, there could be problems with manpower supply, including short-term workers. In the past, as Coupang expanded its business scale, it faced difficulties handling the increased volume of Rocket Delivery logistics with its own workforce, resulting in delivery disruptions.
Industry insiders believe that if issues such as delivery delays occur and persist, Coupang’s core competitiveness, which has rapidly grown by emphasizing its fast delivery system, could be damaged. Coupang’s growth has been driven by “Rocket Delivery,” launched in 2014. It is a unique Coupang service guaranteeing next-day delivery based on direct product procurement. Additionally, Coupang introduced “Dawn Delivery,” which completes delivery before 7 a.m. the next day if ordered by midnight, currently delivering millions of products including fresh food to customers within just a few hours. The key to enabling these services has been “logistics.” Coupang has built logistics infrastructure nationwide equivalent to the size of 193 soccer fields through massive investment, and as of last year, directly and indirectly employed about 30,000 developers, delivery, and logistics personnel.
◆Coupang: "Deliveries Are Being Made from Other Logistics Centers Unrelated to Confirmed Cases" = However, so far, no delay cases have emerged, and Coupang expects no problems as it uses an artificial intelligence (AI)-based sorting system to redirect shipments to nearby centers. Moreover, the industry sees a method to prevent delivery issues by controlling the sales of Rocket Delivery products, which are operated through direct procurement. An industry official said, “Since Coupang operates a system where sales and delivery are done through direct procurement, it can control the volume it releases. Considering the expected decrease in orders after confirmed cases emerged, there should be no disruptions.”
On the same day, Coupang issued a separate statement reiterating that there are no issues with delivery products. Coupang said, “Currently, deliveries are being made from other logistics centers completely unrelated to the confirmed cases. To ensure 100% customer safety, hygiene work is carried out at every stage right up to delivery. All logistics centers operating normally are undergoing intensive daily disinfection. Beyond simply spraying disinfectant, disinfection personnel regularly wipe down places touched by hands, such as door handles and knobs, with cloths soaked in disinfectant. The products customers receive are safe.”
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