Logistics Partnership Between 'Shinsegae-CJ'... Expanding Forces of the 'Anti-Coupang Alliance'

SSG.com and Gmarket Delivery via CJ Logistics O-NE
Considering Transferring Logistics Centers to CJ Logistics
Competition with Coupang, Which Announced a 'Nationwide Kusekwon' Plan

With the Shinsegae Group and CJ Group forming a sudden business alliance, changes are expected in the logistics competition landscape within the distribution industry. Shinsegae Group's e-commerce platform will apply CJ Logistics' next-day delivery service, the top courier company in Korea. As Coupang announced plans to expand the service area of its own delivery service, Rocket Delivery, the logistics war in the distribution industry is expected to intensify further.

On the 5th, Shinsegae Group and CJ Group held the 'CJ-Shinsegae Business Alliance Agreement Signing Ceremony' and announced that they would cooperate comprehensively in online and offline distribution, logistics, and content sectors. The most notable aspect of this business alliance is that the two companies agreed to collaborate in the logistics sector. The core of the cooperation is to introduce CJ Logistics' next-day delivery solution 'O-NE' into Shinsegae Group's e-commerce platform.

At the 'Business Partnership Agreement Signing Ceremony' between Shinsegae Group and CJ Group held on the 5th, Kim Hong-gi, CEO of CJ Corporation (left), and Lim Young-rok, Head of Business Strategy Office at Shinsegae Group, are signing the agreement.
[Photo by Shinsegae Group]

First, Gmarket will introduce the O-NE service to its next-day guaranteed delivery service, 'Smile Delivery.' Gmarket plans to start the next-day guaranteed courier service through CJ Logistics as early as July. With the introduction of the O-NE service, the order time window for next-day delivery for Gmarket customers is expected to expand. Previously, Smile Delivery required orders to be placed by 8 p.m. to receive delivery the next day, but with O-NE, orders placed by midnight will be delivered the following day.

SSG.com (Ssg.com), which operates its own logistics centers and provides next-day and dawn delivery services, will also cooperate extensively with CJ Logistics. In particular, they are discussing a phased transfer of two of Ssg.com's own logistics centers, the Gimpo NEO Centers, and the Gwangju Opo logistics center to CJ Logistics. Specifically, the two companies are discussing options ranging from CJ Logistics managing the operation of Ssg.com's logistics centers to transferring the entire assets, including the logistics centers, to CJ Logistics.

CJ Logistics will also handle the SSG Delivery volume that originates from Emart stores rather than logistics centers. Currently, Ssg.com's NEO logistics centers mainly deliver directly within the metropolitan area, while deliveries in other regions are carried out from Emart stores located in those areas. According to Shinsegae Group, CJ Logistics will gradually take over the delivery volume originating from Emart stores as well.

Additionally, the two companies are discussing ways to jointly utilize logistics infrastructure. Ssg.com plans to use the logistics cost savings from CJ Logistics' O-NE service to strengthen its grocery (food ingredient) offerings. CJ Logistics aims to achieve 'economies of scale' by handling Shinsegae Group's logistics volume.

With CJ Logistics, which already has a nationwide delivery network, joining hands with Shinsegae-affiliated e-commerce companies, the delivery competition in the distribution industry is expected to intensify further. Shinsegae previously supported next-day delivery only for orders placed by 8 p.m., but by using CJ Logistics' O-NE delivery, the order time will be extended to midnight. Since CJ Logistics has a nationwide network of courier offices and hubs, it can also leverage this infrastructure.

The competitive landscape with Coupang, represented by 'Rocket Delivery,' is also expected to become more prominent. Coupang plans to expand the Rocket Delivery service area, which uses its own logistics for same-day, dawn, and next-day delivery, to nationwide coverage. Earlier, Coupang announced it would increase investment to enable Rocket Delivery in over 230 cities, counties, and districts nationwide by 2027. This corresponds to a population of over 50 million, making Rocket Delivery available even in areas with relatively low demand due to population decline.

Meanwhile, CJ Group has taken the lead in the so-called 'anti-Coupang alliance' as its affiliates have repeatedly clashed with Coupang. CJ CheilJedang stopped supplying major products such as Hetbahn and Bibigo to Coupang from the end of 2022 after disputes over supply prices. Instead, it joined competing e-commerce platforms such as Naver Smart Store, 11st, and AliExpress. Subsequently, in July last year, Coupang reported CJ Olive Young's Health & Beauty (H&B) store to the Fair Trade Commission, alleging that Olive Young blocked small suppliers from supplying to Coupang. CJ Logistics also had a confrontation with Coupang over the 'No Delivery Day' campaign.