Coupang Eats Mart Pilot Service Launches in Gangnam Area on the 3rd
Everyone Joins ○○ Mart... Quick Commerce Competition Heats Up
Small Business Groups "Invading Local Markets... Request for Suitable Business Category"
[Asia Economy Reporter Kim Bo-kyung] Delivery platform companies are expanding their quick commerce (instant delivery) businesses. Coupang Eats recently opened 'Coupang Eats Mart' in the Gangnam area, following Songpa and Gangdong districts in Seoul. Mesh Korea has partnered with Oasis Market to launch 'V Mart' within this year. Meanwhile, concerns are rising that platforms equipped with online and digital competitiveness are waging logistics wars and encroaching on neighborhood commercial districts.
From B Mart to Coupang Eats Mart and V Mart... Expansion of Quick Commerce Business
According to industry sources on the 7th, Coupang Eats expanded its quick commerce front by opening Coupang Eats Mart in Yeoksam-dong, Seoul on the 3rd. Following Songpa and Gangdong, it started a quick commerce service delivering groceries and daily necessities immediately upon online order targeting the Gangnam area. Currently, a free delivery promotion is underway, and operating hours are from 8 a.m. to 1 a.m. the next day. However, Coupang Eats Mart is operating as a pilot service rather than a full-fledged one, meaning the scale, form, and nature of the service may change in the future.
Mesh Korea, which operates the delivery agency platform 'Booroong,' launched a joint venture called 'V' with Oasis Market. They plan to introduce V Mart, combining quick commerce and dawn delivery services, in the Gangnam area within this year. Barogo also launched 'Tango' in August with the slogan of delivering within 10 minutes in some parts of Gangnam. A Barogo official said, "It is currently in the beta test phase," adding, "We are running promotions such as zero minimum order amount and a 2,000 KRW discount on delivery fees."
Delivery Hero Korea, which operates the delivery app 'Yogiyo,' has been acquired by the special purpose company CDPI Consortium, which includes GS Retail. There is speculation that GS Retail will expand its quick commerce business using Yogiyo, the second-largest delivery app.
Small Business Owners and Self-Employed 'Oppose'... "Only Platform Companies Make Money"
As platform companies armed with digital and logistics infrastructure and delivery riders rush into the quick commerce industry, existing small and medium-sized retailers are strongly opposing. Lee Sung-won, Secretary General of the Korea Federation of Small and Medium Business Owners and Self-Employed, said, "We plan to submit an application to the Fair Trade Commission this month to designate the quick commerce industry as a suitable business sector for small and medium enterprises." He added, "If not only Woowa Brothers and Coupang Eats but also existing large distribution companies enter, neighborhood commercial districts will be devastated. Once the business starts and encroachment occurs, it becomes uncontrollable, so we have taken preemptive defensive measures."
When an application for designation as a suitable business sector for small and medium enterprises is submitted, the Fair Trade Commission conducts a fact-finding survey to understand the market and damage status and deliberates whether to recommend the designation. If the quick commerce industry is designated as a suitable business sector, entry by medium and large companies will be prohibited or restricted. Woowa Brothers, which operates B Mart, belongs to the medium-sized enterprise category.
Franchise convenience store owners are not entirely pleased with the overheating competition in quick commerce. Kye Sang-hyuk, chairman of the National Convenience Store Franchise Owners Association, pointed out, "While sales may increase as quick commerce expands, self-employed profits decrease due to delivery fees and platform commissions." He criticized, "They reluctantly adopt delivery services, but only platform companies make money in this distorted structure."
Government and Ruling Party Move to Regulate... Bill Submitted to Support Digitalization of Neighborhood Supermarkets
As conflicts between platform companies and small business owners emerge, the government and political circles are also taking action. The Ministry of Trade, Industry and Energy has started a research project to prepare institutional management measures for online distribution. This is because the current Distribution Industry Development Act virtually lacks regulations for the online sector. A ministry official said, "The impact of quick commerce on neighborhood commercial districts will also be included in the research."
Lee Dong-joo, a member of the Democratic Party of Korea, proposed the 'Act on Promotion of Innovation in Small and Medium Distribution Businesses,' which supports smartization and digital transformation of small and medium distribution companies so that neighborhood supermarkets can also gain competitiveness.
Lee said, "By bridging the digital gap between large and small-medium distribution companies and enabling neighborhood supermarkets close to consumers and delivery distances to provide fulfillment services, we can expect improvements in the competitiveness of small and medium distribution businesses and consumer welfare."
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