The market is empty. There are no groceries or necessities on the shelves. All the supermarkets are in the same boat. Shops have run out of food and daily necessaries like tissue. Lots of people in many countries are hoarding groceries and daily necessities due to the lockdowns to curve the spread of COVID-19 in the spring of 2020. Then, how about the market situation in Korea? At Korean supermarkets, both groceries and daily necessities can be found in ample supplies. Korea has also seriously suffered from COVID-19. However, hoarding did not happen. What makes Korea so different from other countries?

 

Goods delivered right to your front door

The home delivery system in Korea developed after many years of implementation. In the past, the nation-controlled post office managed delivery of the mail and parcels. It is called ePOST and accounted for most deliveries in the nation. However, over time, the number of delivery parcels increased. ePOST could no longer manage the delivery of all the parcels, so companies began to establish delivery businesses. Many people use the delivery company's services. Companies including CJ Logistics, LOTTE Global Logistics, and HANJIN Transportation, all of which run by private enterprises. Currently, there are more than 40 delivery companies in Korea. After their launch, major supermarkets have also started home delivery systems. With selecting grocery items, people can receive them at their homes by choosing a delivery date and time. Emart, Homeplus, and LOTTE Mart all offer home delivery. There is now even the emergence of online shopping malls specializing in quick shipping. ‘Morning star shipping’ provided by Market Kurly is a typical example. These grocery delivery services provide convenience to many consumers and are becoming mainstream shopping methods.
Following Market Kurly, various companies started early morning delivery services from 2015. In November 2018, Coupang launched its 'Rocket Fresh' delivery service, and in June 2019, SSG.COM also launched a similar service. The new early morning delivery services were favored by consumers, which led to fast growth and expansion. Early morning delivery services grossed 10 billion won ($8.14 million) in 2015, and an estimated 800 billion won to 1 trillion won ($651 million-$814 million) in 2019.¹⁾ In other words, in just 5 years, the scale of early morning delivery has grown 80 times. Fresh products are shipped in the early morning hours, which guarantees a high level of freshness and quality. The early morning delivery industry is growing because it separates itself from existing delivery services in terms of freshness. While it differs slightly from company by company, consumers who place orders up to between 11 p.m. and 12 p.m. can receive their items between 6 a.m. to 7 a.m. in the Seoul area. Major companies such as Korea Yakult, LOTTE Department Store, and HYUNDAI Department Store are jumping on the early morning delivery bandwagon.
 

 

Secret for successful early morning delivery

Quick delivery is one of Korea's pride. It has developed over time and has made people’s lives more comfortable. There are three main factors that have made early morning delivery possible. The first is the methodical basis for the delivery system. Currently, Korea's delivery system covers a large number of various items and is a very competitive industry compared to other countries. According to the National Logistics Information Center, about 2.8 billion goods are delivered by CJ Logistics, HANJIN Transportation, LOTTE Global Logistics, and ePOST per year. That means there are 7.66 million parcels delivered per day on average. Also, when Coupang and other companies are added to the mix, about 10 million packages are delivered daily.²⁾ These figures imply that the systematic logistics system in Korea has a solid foundation, and is able to operate under various circumstances. In addition, early morning delivery allows the customer to receive parcels at a particular time. As mentioned above, each region has its own time limitations on order, but companies usually stop taking orders between 10 p.m. to 12 p.m., enabling a delivery time between 5 a.m. to 7 a.m. the next day. This solid delivery system combined with a clear timetable for delivery makes early morning deliveries possible.
The second reason is data-based demand forecasting. Demand forecasting is the prediction of how much a product will sell. These forecasts were determined by CEOs in the past, but nowadays, demand every hour of every day is digitally predicted. Based on the analysis of recorded data, the average demand is obtained and future demand is predicted. Coupang and Market Kurly make decisions based on an analysis of a database. Once it is ready, it is then quickly sent out for delivery. Because demand forecasts are made after looking at collected data, goods can be stockpiled in warehouses in advance so that when an order arrives, the items can be taken off the shelf in the warehouse and sent out immediately. This makes quick delivery possible. Though a company makes predictions using collected data, predictions can be wrong and products can pile up in warehouses, which may have to be discarded. Market Kurly’s stock disposal rate is very low. On average it is below 1%. Kang Seongju, operating leader at Market Kurly, said, “We have a low rate of disposal because we use data to predict demand.”³⁾ That is, Market Kurly effectively analyzes collected data to reduce disposal rates and increase accuracy in predicting future demand. As such, its early morning delivery system, which requires fast delivery in a timely manner, is able to operate efficiently even with a huge number of orders daily.
 

 

The third reason is related to Korean culture itself. Korea is famous for its fast-paced living. Mickey working as a model in Korea, who is from Spain, said, “The first Korean word I learned was ‘quickly’. In fact, I would say the pace of life in Korea is indeed very fast. I think delivery services are more popular in Korea than in other countries. Even toilet paper can be delivered the day after I order it. It is amazing.”⁴⁾ As Mickey states, 'quickly' is one word that could be used to describe Korea. Delivery services help Koreans, who live busy lives. For instance, the Internet speed has soared in recent years. In 2017, according to Akamai Technologies, Korea ranked first in overall Internet speed. Also, as of May 2017, Korea ranked first in mobile download speed according to OpenSignal. This shows how services in Korea have continuously gotten faster and faster. The delivery system is no exception. For those who don't have time to go shopping due to work or other tasks, delivery allows them to receive needed goods without physically visiting a shop. For those who need some items by the next morning, early morning delivery emerged. Overall, then, the delivery system has grown in Korea because it is loved and supported by busy people.

 

Changes in our lives caused by early morning delivery

When early morning delivery first appeared in 2015, it quickly permeated people’s lives and brought new change. Firstly, the pattern of consumption among people has changed. According to Opensurvey, compared to 2019, online-focused grocery purchases in 2020 increased by 3.3% and offline-focused purchases decreased by 6.2%. In other words, offline shopping has decreased while online consumption has increased. Furthermore, ‘The survey of awareness of the early morning delivery in 2020’ from Embrain Trend Monitor found 67% of the people who participated in the survey had experienced early morning delivery. Among these people, 49.7% said they used the service because it meant they did not have to visit an actual grocery offline. Online shopping has become more convenient than offline shopping, so it gets more diversified. Major supermarkets and convenience stores have also started fast delivery services. LOTTE Mart has launched ‘Baro (Right now) Delivery’, Homeplus Express has its ‘Immediately Delivery’, and convenience stores like CU and GS25 are doing deliveries through applications such as ‘Yogiyo’. While early morning delivery is usually for fresh food and home meal replacements, markets are also delivering daily necessities. Besides, the cosmetic and fashion industry also introduce a delivery system. Competition for ‘fast’ delivery, which began with early morning delivery, has changed purchasing patterns and raised satisfaction among consumers.
As online purchasing increases, companies are offering various types of delivery services. Although Coupang is an electronic commerce site, it started a delivery service called ‘Rocket Delivery’ in 2014. Unlike other e-commerce sites, it reduces delivery time because it is self-delivery in nature. Currently, Coupang has begun exploring early morning delivery, which has been led by Market Kurly since 2018. Coupang’s early delivery service, ‘Rocket Fresh’, is the only delivery service that shipping on a nationwide basis. It also offers 'Rocket Fresh within a day', for consumers who place orders before 10 a.m., the delivery will be made before 6 p.m.. With these new services, Coupang’s sales figure of 30 billion won ($24.5 million) in 2014 rose to 7.153 trillion won ($5.84 billion) in 2019.⁵⁾ The figures illustrate the growth in fast delivery sales. Coupang is earning good profits from its early morning self-delivery service, so other companies have begun adding their own uniqueness to their delivery services to attract consumers. On April 28, LOTTE started a same-day delivery. The service gets products to consumers within 2 hours, and the items are those that are sold at their actual shop, not stored in a warehouse. This is unique as it is faster and more enticing than regular e-commerce delivery services. Most changes came about as part of the initiative to avoid face-to-face contact to prevent the spread of COVID-19.
 

 

High demand and adequate supply have guaranteed the success of early morning delivery services in Korea as well as inspired the services to be more unique. However, the treatment of delivery persons who handle the delivery of parcels has not developed as much as the services themselves. On March 12, a delivery person in his forties, called Coupang Man, died during an early morning delivery from a cardiac disorder. He was employed under the True Dawn system. True Dawn was introduced in October 2018 and brought about many changes to deliveries by Coupang for those employed on night shifts. Workers are required to start work at 10 p.m.. They are expected to finish their first deliveries by 3:30 a.m., and their second load of deliveries by 7 a.m.. The goal of the operations was to raise logistics, it has caused many unforeseen health issues for night shift delivery staff. COVID-19 began spreading near the end of 2019, and it is still around. In early 2017, each Coupang delivery person made deliveries to 110 homes a day, but once the virus had spread throughout Korea, the work of delivery staff increased to deliveries of parcels to more than 150 to 160 homes in Daegu and Gyeongbuk Province.⁶⁾ The expanded home delivery service meant that Koreans did not have to hoard items, but it greatly increased the parcel workload of delivery persons as well as the pressure on them to meet the delivery times. Consumers have also expressed concern regarding the extra burden delivery persons face due to early morning deliveries. In the ‘The survey on awareness of early morning delivery in 2020’ by Embrain Trend Monitor found that 80.2% of respondents said the working conditions for delivery persons should be improved. Early morning delivery has allowed consumers to receive fresh products faster, but it has also decreased the health of workers providing those products.
 

 

Basic principles for new delivery systems not to forget

Korea has readily adopted early morning delivery likely because of its already presenting systematic delivery system, and now for its quick demand data analysis and forecasting combined with ‘fast-paced living’ culture. Early morning delivery has changed consumer’s consumption patterns, from traditional shopping at stores to online-purchases. To keep up with consumer trends, e-commerces, major supermarkets, convenience stores, and other business companies have begun establishing new forms of delivery systems. Fast delivery is now the expectation among consumers, but people should not forget the suffering this brings to the workers who must make those deliveries. Any new delivery system will work efficiently and properly only when the rights of its laborers are appropriately kept.

 

1) Lim Deahwan, "'The Explosive Growth' Dawn Delivery War... Even LOTTE and SHINSAEGE Join the War", Munhwa Ilbo, January 8, 2020

2) Na Wonsik, "[Economics at Home]⑥There's No Panic Buying...Power of K-Distribution·Delivery", Business Watch, April 8, 2020

3) Jeon Hyewon, "The True Reason 'Rocket·Early morning delivery' Is possible", Sisa In, March 5, 2019

4) "Talking about Korean's 'Fast culture'", YouTube video, posted by "KOREAN BROS ENT", September 23, 2019

5) Cho Yoonju, "Coupang, 7 Trillion Won in Sales Last Year...The Deficit Has Decreased", The Financial News, April 14, 2020

6) Kim Heejin and Go Heejin, "Due to Excessive Shipments...Coupang Staff Dies", The Kyunghyang Shinmun, March 17, 2020

 

Kim Lee Hyunmin / Editor-in-Chief
smt_lhm@sookmyung.ac.kr
Ahn Ha Yura / Culture Section Editor
smt_hyr@sookmyung.ac.kr