E-commerce firms struggles to cope with resurging COVID-19
By Kim Jae-heun
The e-commerce sector has been one of the biggest beneficiaries of the COVID-19 pandemic.
When people were advised to stay home and work or study from there, the volume of orders for groceries on online markets skyrocketed.
While large companies, like Coupang and Market Kurly, rode the unexpected surge their resources have also been under strain from the increasing demand for their services.
Demand looks set to increase even further, especially as another infection cluster has led the government to issue an order restricting operations of coffee franchises and restaurants in Seoul, Gyeonggi Province and Incheon effective since Sunday.
The government has issued marginally stricter social distancing measures of “Level 2.5” that include closure of sports facilities and bars.
Despite the increase in demand for online shopping Coupang, Market Kurly and SSG.com are struggling to cope with it.
The top online retailer Coupang has been falling short of fresh food stock.
Most items in the online mall have been shown as “unavailable for purchase” since Aug. 31, a day after the government implemented the new quarantine guidelines.
“I was adding items in the cart on Coupang and when I tried to make a final payment, they all went sold out,” said an office worker surnamed Kim. “Some of the other items I ordered with Rocket Delivery service the previous day were delayed. I received a message from Coupang apologizing for the inconvenience and promising to deliver my order by the next day.”
Coupang admitted that some products are actually out of stock but some are shown as unavailable on the online platform because it is receiving more orders than it can process.
“We have closed down one of our logistics centers as one of the workers there tested positive for COVID-19,” a Coupang official said.
On Monday, Coupang's distribution center in Seocho-gu, southern Seoul, shut down following confirmation of virus cases there. This caused delays and cancellations of certain items distributed at the facility.
Shinsegae's online retailer SSG.com is also struggling to send orders on time. A deliveryman at its logistics center in Gimpo, Gyeonggi Province, tested positive for the coronavirus and the venue was duly closed down last Friday.
Online orders on SSG.com surged starting Sunday, when the quarantine authority announced the new guidelines would come into effect the next day.
“The volume of orders placed recorded the highest levels since mid-February this year when the pandemic first became serious here. We can deliver a maximum 130,000 orders a day and we received 127,400 orders on Sunday,” a SSG.com official said.
The sharp increase in demand for fresh food delivery left SSG.com's online shopping reservation service jam-packed with orders and a backed up delivery schedule.
The online retailer provides a reservation service for customers to select a delivery time, so packages will arrive within a window of three to four hours.
Another e-commerce firm Market Kurly, which specializes in grocery items, posted a notice on Sunday at 5 p.m. that all items were out of stock and its online mall was to be closed until 11 p.m.
Market Kurly said its logistics center and cold storage facility have both been closed down due to detection of virus cases there and as a result it had to stop receiving orders.
“Until our workers there tested positive, we managed to deliver at most 70,000 to 80,000 orders per day,” a Market Kurly official said.
Eighty percent to 90 percent of Market Kurly's overnight deliveries come from the capital areas.
The government's stricter countermeasures raised Market Kurly's overnight delivery orders in Seoul, Gyeonggi Province and Incheon on Saturday by 20 percent week-on-week.
Market Kurly CEO Sophie Kim sent an email to customers on Monday saying the company will “adopt an emergency operating system while lowering the price of essential products.”
Another online retailer Lotte ON saw a 37.2 percent month-on-month increase in total sales between Aug. 28 and 30.
But e-commerce firms are still worried about the possibility of further COVID-19 outbreaks at their facilities.
So far, SSG.com has had to shut down one facility and Market Kurly had to shut down two facilities after their workers were tested positive for the virus.
Coupang closed five centers including its headquarters in Jamsil, southeastern Seoul, on Aug. 24.
“We expect more orders to be placed online prior to Chuseok, Korea's major autumn holiday, next month and all the e-commerce firms will focus on employing part-timers for delivery service. Meanwhile, all are hoping for the best and that no more COVID-19 infections occur at their workplaces,” an industry source said.
As well, local department stores and supermarkets were struck hard by the stricter social distancing measures.
Sales at Lotte Department Store and Shinsegae Department Store plunged week-on-week last Sunday by 24 percent and 28 percent respectively.
Shinsegae Department Store had to shut down its busiest branch in Gangnam on Sunday as one of the workers there tested positive for COVID-19.
Sales at supermarkets on the same day also decreased by 10 percent compared to two weeks earlier. Major supermarkets were closed last Sunday under an unrelated regulation that requires their closure on two Sundays each month.
“Because of the stricter quarantine measures many people moved to online shopping over the weekend. We are expecting the same for the upcoming weekend as well,” an industry source said.