Kurly advances to tourism sector to better promote IPO

Kurly CEO Sophie Kim speaks during a press conference held at the company's headquarters in Seoul in this 2019 file photo. Yonhap

Kurly wants to expand business in non-food sector

By Kim Jae-heun

Kurly, the operator of online grocery retailer Market Kurly, is preparing to enter the car rental and flight reservation businesses. It hopes that increasing its sales record will build up its corporate value before its initial public offering planned for next year.

Kurly added the two new services to its business portfolio at the end of June and has already started selling hotel vouchers, but it said it will not start providing vehicle rentals or making plane ticket reservations right away.

“We are considering providing a non-stop service in the tourism sector as our hotel vouchers are selling well. But we don't have plan to rent out vehicles or sell plane tickets hastily,” a Kurly official said.

The market for car rentals has been growing amid the prolonged COVID-19 pandemic. More people are choosing to commute to work with a rented car instead of taking a bus or subway out of fear of infection.

According to the Ministry of Land, Infrastructure and Transportation and the Korea Rent-a-Car Association, the number of registered rental vehicles has been increasing consistently from 959,057 in 2019 to 1.05 million in 2020 and 1.09 million as of June 2021.

Reservations for overseas flights are also expected to increase when 70 percent of the population gets vaccinated within this year.

Last month, Kurly's value was estimated at 2.5 trillion won ($21.4 billion) after its gross merchandise value skyrocketed to 900 billion won, up nearly 90 percent from 2020. A considerable figure came from non-food sector. Market Kurly has been selling various electronic goods recently including refrigerators, air conditioners and smartphones.

Market Kurly's main products are fresh food. This sector grew explosively based on its business in the capital area, thanks to the pandemic that forced people to stay home and order food online.

Kurly revealed its plan to expand its overnight delivery service to the outskirts of Seoul, Gyeonggi Province and Incheon starting in the second half of this year.

However, it will not create a huge profit for the online retailer as it outsources delivery service to CJ Logistics, the country's largest logistics firm.

It also aims to hire an additional 100 program developers, which entails an increase in salary payments. This leaves Kurly with not many options but to increase its sales volume in the tourism sector. However, Kurly said the main reason it is booking flights and renting out cars is because it prioritizes customer convenience.

Meanwhile, Market Kurly showed 953 billion won in sales and a 116.3 billion won operating loss last year. It is planning to go public in 2022, but it has been delaying selecting an IPO underwriter.

Its rival SSG.com is also planning to go public and the two are competing for securities companies.

“SSS.com is preparing for its IPO faster than many expected and it has affected Kurly to choose its underwriter. Kurly still hasn't chosen one and this shows it is going through internal hardship,” an industry source said.