Delivery Hero, Coupang Eats face possible curbs on quick commerce

A delivery driver picks up an order from a local convenience store in Seoul on May 6. Korea Times file

By Kim Jae-heun

Quick commerce has emerged as a new growth engine for local retailers that deliver online orders in less than an hour. Currently, major supermarket operators and food delivery firms sell only groceries through their quick commerce platforms, but they plan to boost sales by expanding their product variety.

However, such plans are facing a strong backlash from mom-and-pop stores in small towns that are accusing the big players of encroaching into their turf. A coalition of small retailers urged lawmakers to protect their business rights and provide systematic regulations against the large retailers.

The Ministry of Trade and Industry and Energy has decided to hire a private research organization to study the impact on small businesses of quick commerce pursued by retail giants. The case study will start as early as next month and finish by March 2022. The ruling Democratic Party of Korea intends to adjust the Distribution Industry Development Act based on the study and propose a revised bill to the National Assembly in the first half of next year.

Concerns over the growth of quick commerce and its influence on small retailers were raised during a National Assembly audit this month.

Rep. Lee Dong-ju of the ruling party pointed out that food delivery services such as Baedal Minjok and Coupang have been competing fiercely to reduce the time it takes to fulfill orders, which had an impact on mom-and-pop stores in small towns.

Quick commerce is classified as an e-commerce business. But because its service targets customers in smaller towns, the business overlaps with those of mom-and-pop stores.

A group of small retailers fighting against Coupang also plans to ask the Korea Commission for Corporate Partnership to ban major companies from operating businesses in small towns. If the request is accepted, Baedal Minjok's "B Mart" and GS Retail's "Yo Mart" will not be able to offer quick commerce services in designated areas.

Meanwhile, demand for quick commerce has displayed explosive growth along with e-commerce during the COVID-19 pandemic. The domestic quick commerce market is expected to surpass 5 trillion won in size by 2025.

Woowa Brothers and Coupang are not the only ones that have launched quick commerce businesses here. Lotte Shopping, Shinsegae, Homeplus and GS Retail have started their own services utilizing their distribution channels established in smaller towns.

In particular, GS Retail's quick commerce business saw daily sales surge 269 percent in just four months.

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