Coupang to upgrade delivery service after going public

Working conditions of delivery workers may disturb the success of Coupang's IPO

By Kim Jae-heun

After confirming its aim to go public on the New York stock market, Coupang said it will beef up its already-fastest overnight delivery service to “same-day delivery.”

“Currently, millions of items, including fresh foods, are delivered overnight or the next day. We will make the delivery on the same day for almost all orders in the country soon,” Coupang wrote in the securities report.

Coupang currently operates 10 fulfillment centers, with plans to build seven more. A fulfillment center is where the company stocks items it purchased directly from sellers across the nation, and delivers them to buyers living locally.

This fulfilment center system allows retailers to deliver orders faster, and customers can choose to receive their items at convenient times.

Many of Coupang's rivals are keeping an eye on the online retailer, as this system could make delivery service competition fiercer.

“Coupang itself is already a threatening competitor. It grew on its Rocket Delivery service, and after going public it will continue aggressive investment in its delivery service,” an industry source said.

This fulfillment system, with its multiple distribution centers, is essential for companies operating e-commerce businesses, and Coupang has the most in the country.

The automation of the facilities is another important factor in beefing up delivery services. When Coupang secures funds from its NYSE listing, it is set to invest in logistics, first, to widen the gap between its rivals.

Local retail giants like E-mart and Lotte Shopping are planning to utilize their discount stores as fulfilment centers. E-mart has been building its “Neo” automatic distribution center and establishing “Picking & Packing” centers to facilitate faster delivery.

Lotte Shopping has started its fulfilment service with over 90 Lotte Mart stores in the country, where customers can receive certain items within two hours in collaboration with local delivery firms. Homeplus is doing the same with some 300 discount and convenience stores in the country, in order to use them as distribution centers, and it partnered with Yogiyo, the country's No. 2 food delivery service, to deliver the items.

One possible outstanding problem is the working environment for delivery workers and their safety issues.

As demand for delivery services and food delivery has increased due to the COVID-19 pandemic, the shortage of workers has arisen as a problem. It led delivery drivers to overwork and sometimes even led to their deaths.

Companies, be they e-commerce or logistics firms, came up with countermeasures to hire more delivery drivers and guarantee more money.

Coupang restarted its logistics business after registering with the Ministry of Land, Infrastructure and Transport in January, promising that it will improve working conditions for delivery workers.

Instead of hiring workers through an agency, Coupang offered to employ and manage them directly, to make sure they work no more than 52 hours a week. It also pledged to provide employment insurance and at least 15 days of vacation a year.