[Regulatory Republic] Signless OO Mart... Is It an Infringement on Alleyway Businesses or a New Industry?

Coupang Eats Mart Opens 4th Store in Daechi-dong
Free Delivery Event Even for 500-Won Bottled Water
Small Business Owners and Politicians Call for Commercial Impact Study
Startups Entering Quick Commerce Ecosystem Also Under Consideration

Coupang Eats Mart 3rd Branch (Yeoksam Branch), which opened near Gangnam Station last November. Motorcycles driven by Coupang Eats' own riders are lined up waiting.

[Asia Economy Reporter Kim Bo-kyung] Coupang Eats Mart Branch No. 3 in Yeoksam-dong, Seoul. Located near the busy Gangnam Station, Coupang Eats Mart has no signboard. Sheets are attached to prevent passersby from seeing inside. About 10 motorcycles were lined up at the front and back entrances of the building. A rider came out from the delivery rider-only entrance, loaded products into the motorcycle delivery box, and hurriedly moved away.

The quick commerce industry, which delivers various products such as ingredients and daily necessities stored in urban logistics warehouses called Micro Fulfillment Centers (MFC) within 30 minutes to an hour after online ordering, is expanding. Coupang Eats expanded its service area by opening Coupang Eats Mart Branch No. 4 in Daechi-dong recently, following the opening of Branch No. 3 (Yeoksam branch) in November last year. Coupang Eats Mart currently has no minimum order amount and is running a free delivery fee (2,000 KRW) promotion, so customers can receive even a 500 KRW bottle of water without paying delivery fees. Coupang Eats operates a monthly salary system (2.4 to 2.7 million KRW per month) for mart-dedicated riders who work five days a week like regular employees.

Barogo, which operates a nearby logistics platform, is also expanding its quick commerce business ‘Tengo.’ Since August last year, Barogo has been piloting the Tengo service in Gangnam, Seoul, delivering daily necessities within a 1 km radius in under 10 minutes. A Barogo official stated, "Tengo offers over 1,000 product varieties including meal kits, snacks, beverages, and bottled water, and the number of orders is doubling every month." Woowa Brothers, which launched the quick commerce service ‘B Mart’ in 2018, started services last year in Jung-gu, Daejeon, a non-metropolitan area.

Small business owners operating neighborhood marts and supermarkets have begun to check the expanding quick commerce industry. Several small business organizations jointly submitted an application to the Win-Win Growth Committee last November, requesting designation as a small and medium enterprise suitable industry, and plan to resubmit it soon after some revisions. Lee Sung-won, Secretary General of the Korea Federation of Small Business Owners and Self-Employed, said, "If not only platform companies but also existing large distribution companies competitively enter the quick commerce market, neighborhood commercial districts will be devastated," adding, "Regulations such as large mart closures on certain days could become practically ineffective, so we have taken preemptive defensive measures." A Win-Win Growth Committee official said, "Once the application is officially received, we plan to conduct a status survey on the scale of the quick commerce business and the damage to small business owners through the Small and Medium Business Research Institute."

Mr. Lee, who has operated a mart in Gwanak-gu, Seoul for about a year and a half, said, "I heard that several motorcycle delivery riders load goods in an organized manner in front of nearby B Mart," adding, "Since it is a kind of shared business, it will inevitably affect the sales of my store." Lee Dong-joo, a member of the Democratic Party, argued during the recent National Assembly audit, "MFCs located in urban areas should be classified as retail distribution businesses rather than logistics warehouses," and "Since they operate targeting specific areas, measures such as conducting commercial district impact assessments on how opening affects existing commercial districts should be prioritized."

Some voices caution not to overlook that young startups are entering the quick commerce ecosystem. For startups that quickly adapt to changes in the distribution market, the quick commerce ecosystem can be used as a new sales channel. A startup industry official said, "Rather than confronting with the logic of neighborhood commercial district invasion, it is time to consider ways for platform companies and local small business owners to coexist."

Professor Kim Hyun-kyung of the Department of IT Policy at Seoul National University of Science and Technology said, "There needs to be a social consensus on how far small business owners should be protected," adding, "A scientific field survey considering various factors such as consumer utility and guaranteeing free competition, rather than a method calculated for political votes, should be conducted."