[Exclusive] Startup 'DoHands' Invested by Naver Undergoes Layoffs of Over Half Its Employees Due to Business Decline

Fulfillment-as-a-Service 'Poomgo' Faces Rising Logistics Costs and Accumulated Losses
Impact Inevitable on Coupang Rival 'Naver Fulfillment Alliance' (NFA)

Lee Yoonsook, CEO of Naver Forest CIC, holding Two Hands, visited the Yongin Center and is taking a commemorative photo with Park Chanjae, CEO of Two Hands. Photo by Two Hands

[Asia Economy Reporter Kwak Minjae] The startup 'DoHands,' a participant in the Naver Fulfillment Alliance (NFA), has reportedly notified more than half of its headquarters employees of recommended layoffs due to worsening management conditions. As DoHands undergoes restructuring, setbacks are inevitable for Naver's ambitious online fulfillment (integrated logistics) plan aimed at competing with Coupang.

Additionally, DoHands has sought to secure profitability by terminating contracts with about 20 out of 160 client companies at its logistics centers. This is interpreted as an effort to improve the high-cost, low-profit structure rather than expanding its scale.

According to industry sources on the 20th, DoHands recently notified over 50% of its total headquarters staff of recommended layoffs. The total workforce of approximately 250 consists of headquarters operational staff and logistics center employees. The difficulties faced by DoHands, which had been on a growth trajectory, are attributed to rising logistics costs and accumulated deficits leading to deteriorating management. An insider familiar with the internal situation revealed that DoHands recently required a significant number of headquarters operational staff to finish work and leave the company within two weeks.

In response, a DoHands representative described the measures as management rationalization. The representative stated, "The recent restructuring is a management rationalization effort aimed at transforming the company into an organization centered on logistics centers rather than the headquarters, and it is far from being due to worsening management." They added, "The headquarters staff are being restructured, and the remaining minimal personnel will be assigned to logistics centers located in regions such as Yongin and Eumseong."

Regarding the recent contract terminations with clients of the Yongin Fulfillment Center, the representative explained, "There was a consensus that the spectrum of clients was very broad, so contracts were terminated only with clients whose service models did not align with DoHands'."

Founded in 2012 under the name DoSon Company, DoHands is a fulfillment startup offering the logistics management agency service 'Pumgo.' It currently operates five fulfillment centers nationwide, covering approximately 39,600 square meters. NFA is a platform created by Naver in collaboration with various delivery companies to provide diverse customized delivery services to Smart Store sellers. DoHands operates as a partner of NFA, the fulfillment data platform built by Naver, through its e-commerce fulfillment solution 'Pumgo.'

Exterior view of Two Hands' fulfillment center. [Photo by Two Hands]

DoHands has grown by securing funds from major investors. In 2019, it received a Series A investment worth 5.5 billion KRW from Naver, KDB Capital, BeHigh Investment, Daesung Startup Investment, and Shinhan Alternative Investment Management. In September last year, it attracted a Series B investment of 21.6 billion KRW from IMM Investment, the Korea Development Bank, Naver, and others. The total accumulated investment amounts to 32 billion KRW.

The contraction of DoHands could also disrupt Naver's logistics expansion plans through NFA, a key business focus. Unlike Coupang, which has invested heavily in logistics infrastructure, Naver has pursued a strategy of alliances with existing logistics leaders. DoHands was one of the NFA members highly valued for its business competitiveness, to the extent that Naver invested twice in the company.

Lee Yunsook, CEO of Naver Forest's Company-In-Company (CIC), showed affection by personally visiting DoHands' Yongin Pumgo Center in May to promote the activation of the Naver Fulfillment Alliance. Currently, Naver collaborates with companies including DoHands, the operator of Pumgo, CJ Logistics, OurBox, Wekeep, Fasto, DeliverBird, and Selfy.

Earlier, Mesh Korea, operator of the delivery platform 'Vroong,' joined the Naver Fulfillment Alliance (NFA) in July this year. However, due to financial difficulties and a management rights sale, Mesh Korea ended its delivery services within NFA shortly after launching them. This recent restructuring at DoHands could similarly act as a negative factor for Naver's online fulfillment plans.

Fulfillment Service

Fulfillment is a service where a logistics specialist company selects and packs products according to orders on behalf of sellers and handles delivery. It manages the entire logistics process beyond simple delivery, including receiving, inspection, storage management, picking, packing, and shipping. It may also handle exchanges and refunds upon customer requests. This concept represents managing all logistics processes directed at customers on behalf of sellers and is considered a core service of e-commerce. A representative example is the FBA (Fulfillment By Amazon) service provided by Amazon, the world's largest e-commerce company.