Convenience stores' sales much affected by B Mart, Yo Mart

Delivery Hero introduces its new fulfilment store Yo Mart. / Courtesy of Delivery Hero Korea

By Kim Jae-heun

Local convenience stores' sales coming from delivery services have nosedived affected by the appearance of “fulfillment” stores.

Fulfillment stores are a combined form of distribution center and convenience store run by food delivery firms such as Woowa Brothers and Delivery Hero. They sell products purchased directly from manufacturers or farmers and provide delivery services to customers within an hour.

According to Rep. Hong Sung-kook of the ruling Democratic Party of Korea (DPK), Woowa Brothers' B Mart saw its sales skyrocket 10-fold over the 10 months since it was first introduced last November.

The delivery firm did not reveal exact numbers related to its business performance but the lawmaker confirmed B Mart's sales in Seoul have increased by 963.3 percent as of August this year.

At the same time, convenience stores' sales coming from delivery services in the capital dropped by half.

The Korea Association of Convenience Store Industry (KACSI) said one particular convenience store brand had almost double the amount of its branches in Seoul start a delivery service between last November and August this year, but the number of orders received in the period dropped by 45 percent.

Following the success of B Mart, Delivery Hero's food delivery service application Yogiyo also launched a fulfillment store Yo Mart last month. Customers within 3 kilometers of the store can receive their orders in less than 30 minutes.

This caused a backlash from convenience store owners who allege that the fulfilment stores are intruding on their commercial rights.

The KACSI said Woowa Brothers and Delivery Hero are conducting unfair trade practices such as promoting their fulfilment store services on top of convenience store services through their online platforms.

When customers search for an item to order for delivery from a convenience store, Yogiyo will expose Yo Mart on top of all others on the screen raising the probability for people to choose them. Woowa Brothers does not even allow its competitors on the list of search results on its platform.

Convenience stores that consign their delivery service to Woowa Brothers and Delivery Hero call the system unfair.

Moreover, there is an allegation that Delivery Hero is utilizing its big data collected from its Yogiyo platform for Yo Mart.

Convenience stores depend on Delivery Hero for their big data to learn about customers' shopping habits and trends. But it is alleged that Delivery Hero is providing a limited amount of information to its rivals while fully supporting its fulfillment store.

Delivery Hero said Yo Mart is operated by Delivery Hero Store Korea, which is different from Delivery Hero Korea that runs Yogiyo, and it does not share data with Yo Mart.