[Why&Next] Korea’s Walmart vs Coupang’s Reign: Is the Dawn Delivery Market on the Verge of Upheaval?

Push to Allow Dawn Delivery for Hypermarkets
Logistics Competitiveness of Hypermarkets Challenging Coupang

"Change in the retail industry has accelerated. Our financial results not only accommodate these changes, but also demonstrate that we are leading them. For our customers, the future is fast, convenient, and personalized."

John Furner, CEO of Walmart, stated this on the first page of Walmart’s FY2026 earnings report, which ended last month. At that time, Walmart announced that its annual revenue increased by 5.6% year-over-year to USD 190.7 billion (excluding currency effects), and that global e-commerce sales rose by 24% thanks to the growth of store pickup, delivery, and marketplace segments. Walmart, the world’s largest offline retailer, is still maintaining its dominance in the retail market in competition with Amazon, the largest global e-commerce platform.

As the government and ruling party move to ease regulations prohibiting late-night operations of domestic hypermarkets, attention is focused on whether the dawn delivery market, currently dominated by Coupang, will undergo a shake-up. If large hypermarkets with hundreds of locations nationwide join the dawn delivery competition, they can secure new growth engines by combining online and offline operations, just as Walmart has done.

According to the National Assembly’s legislative information system on March 2, amendments to the Distribution Industry Development Act, which would allow dawn delivery by hypermarkets, were submitted one after another last month. The amendment sponsored by Dongah Kim of the Democratic Party of Korea allows online delivery by hypermarkets and super supermarkets (SSMs) without restrictions, while maintaining offline business regulations such as the mandatory closure on public holidays.

Sungwon Kim, a member of the People Power Party, also sponsored an amendment that excludes SSM franchise stores from business restrictions and removes regulations prohibiting late-night operations (from midnight to 10 a.m.) for both hypermarkets and SSMs.

The core issue in this round of amendment discussions is ‘logistics’. The current Distribution Industry Development Act is based on regulations targeting offline consumers, but as online orders and deliveries have become bundled with these, hypermarkets have been fundamentally barred from utilizing their logistics infrastructure during late-night hours. In contrast, online-only platforms have expanded dawn delivery outside the scope of regulation and have seized the market. The proposed amendments aim to resolve this regulatory asymmetry by enabling stores to be used as logistics hubs even if they are not open for sales.

Why Is Dawn Delivery So Important? ... Coupang’s Market Share at 75%

Dawn delivery is not just about earlier delivery times. The experience of finding products at your doorstep when you wake up in the morning increases purchase frequency, expands the range of products consumers buy, and strengthens dependence on a specific platform. Once the consumption pattern of purchasing daily necessities, fresh food, and manufactured goods all at once takes root, the platform functions as essential life infrastructure.

For this reason, the core value of dawn delivery is not profitability, but the ‘lock-in’ effect. Even if it means incurring short-term losses, retaining users allows platforms to later recoup profits through membership fees, advertising, and commission charges. This is the background behind why Coupang has continued to invest in logistics and dawn delivery despite incurring large deficits for years.

Currently, the number of dawn delivery users in Korea is estimated at around 20 million. Among them, Coupang’s market share is said to reach about 75%. This structure goes beyond simple market leadership and is effectively monopolistic.

The foundation of Coupang’s dominance lies in logistics and product assortment. According to the Ministry of the Interior and Safety, Coupang has registered 246 logistics hubs nationwide for warehouse operations. Moreover, the number of SKUs (stock keeping units) eligible for Rocket Delivery is estimated to exceed five million. Considering that Naver Shopping offers between 200,000 and 300,000 guaranteed-arrival products and Market Kurly offers about 40,000, the gap is overwhelming.

Hypermarkets with Over 1,800 Stores ... Existing Dawn Delivery Companies on Alert

Although hypermarkets also have nationwide store networks, business regulations have prevented them from utilizing these locations for late-night logistics. Stores scattered across the country have only served as daytime retail spaces, and they have essentially been unable to even join the starting line in the dawn delivery competition.

If regulations are relaxed, the situation changes. The three major hypermarkets-Emart, Lotte Mart, and Homeplus-collectively have about 670 stores nationwide. Among these, around 460 stores, or 69%, already serve as picking stores that select and deliver products for online orders. Including SSMs, the number increases to more than 1,800 stores. This infrastructure can be converted into dawn delivery hubs without major additional investments. In terms of store count, the hypermarket sector would surpass Coupang’s number of logistics hubs. Unlike Coupang’s logistics center-focused model, hypermarkets could employ a different approach: ‘community-based delivery’ utilizing stores close to residential areas.

Among the three hypermarket companies, Emart is widely viewed as being in the most advantageous position. Emart has already established an online order and delivery system centered on SSG.com and boasts the strongest store-based picking capability. Its high store density in the Seoul metropolitan area and other major cities is expected to provide an edge in the early expansion of dawn delivery services.

Lotte Mart’s strength lies in its integrated platform strategy, connecting with Lotte On, but the key will be the speed of execution and coordination across departments. Homeplus benefits from store accessibility, but after years of closing stores and currently undergoing corporate rehabilitation procedures, it is considered to have limited capacity to aggressively compete in the dawn delivery market.

The entry of hypermarkets is also expected to place significant pressure on existing dawn delivery specialists such as Kurly and Oasis Market. While these companies pioneered the market with premium fresh food and curated selections, they face structural limitations in product assortment and logistics scale.

Kurly has already responded by launching ‘Midnight Saetbyeol Delivery’, which allows customers to receive products before midnight on the day of order, as part of a strategy to further segment delivery times. Oasis Market is reportedly considering ways to strengthen dawn delivery, including linking with TMON’s reopening.

Yonhap News Agency

"A Turning Point That Could Reshape the Market" ... Labor Issues Remain

The industry believes that, while this round of amendments to the Distribution Industry Development Act may not immediately end Coupang’s dominance, it could serve as a turning point that changes the balance of the retail market. Once dawn delivery becomes a standard option across the entire retail sector, rather than a privilege of a single platform, the standards of competition will inevitably be redefined.

Signs of change are already emerging in the market. According to retail analysis service WiseApp Retail, Coupang’s monthly active users (MAU) in January of this year stood at 33,180,863, down 3.2% from the previous month. This means 1,099,901 users left in just one month. Considering that the decrease in December last year was only 0.3%, the decline has significantly accelerated. This is believed to reflect the full impact of the personal information leak incident that occurred at the end of last year. In fact, while Coupang’s annual revenue last year surpassed KRW 49 trillion and continued to grow, the number of Wow membership subscribers fell by about 100,000 in the fourth quarter alone.

However, there are still numerous variables to overcome before the new system can be fully implemented. In particular, labor issues are cited as the biggest variable in the expansion of dawn delivery by hypermarkets. If late-night packing, sorting, and delivery work increases, changes in work shifts and staff recruitment will be unavoidable. Labor circles are also raising concerns about the de facto expansion of night work.

Overcoming opposition from small business owners is another hurdle. Last month, the government and ruling party held a closed-door meeting with small business groups to discuss win-win measures in preparation for the approval of dawn delivery by hypermarkets, but small business owners requested a fundamental reconsideration of the regulatory easing.

An industry official said, "While this round of legislative discussions may not lead to immediate seismic change, it could alter the competitive conditions in the dawn delivery market. Even if the system is implemented, dawn delivery is a business with very high fixed costs, unlike its visible growth indicators. Unless it is widely accepted on the ground, the pace of expansion will be limited, and the market is likely to be reorganized around operators with strong financial capacity."

This content was produced with the assistance of AI translation services.