Retailers end early-morning deliveries, citing high costs

Despite the pandemic-triggered e-commerce boom, some South Korean retailers have begun shutting down early-morning deliveries, saying that the cutthroat competition for early bird customers has led to increased operating costs.

GS Fresh Mall, an online shopping mall under GS Retail Group, said Wednesday it plans to suspend its early-morning delivery service starting July 31.

The company said it has decided to stop the service because of the large cost of additional payrolls for couriers, and the cost of extensive packaging materials for keeping groceries and foods fresh.

“We aim to improve the efficiency of the company’s delivery system and to carry out a more eco-friendly business,” said a GS Fresh Mall official. “The company will focus on unlimited one-day delivery service for our prime membership customers.”

The nation’s largest meal kit provider Fresheasy has temporarily shut down its early-morning deliveries from Tuesday.

“Due to a series of acquisition deals, the amount of food products we sell online has surged. So we plan to suspend some of our services, including deliveries for late-night orders,” it said.

Fresheasy has this year acquired diet food manufacturer Heodak, consumer goods supplier Line Logistics System Co., and its smaller rival Tasty9.

Industry sources say high costs for early-morning deliveries must have been burdensome for the company as well. Although its sales revenue surged by 165 percent from 2019 to 188.9 billion won ($143.7 million), it also posted a 46.6 billion won in operating loss for the same period, an increase of 212.7 percent.

Hello Nature, an online shopping mall for fresh groceries under BGF retail, and Lotte on, an e-commerce platform under the retail giant Lotte Group, stopped providing late-night order deliveries in May and April, respectively.

However, the major three e-commerce platforms -- Coupang, Market Kurly and SSG.com, an online shopping platform under retail giant Shinsegae -- are expected to continue their delivery services for late-night orders, sources said.

In partnership with CJ Logistics, tech giant Naver is also poised to enter the early-morning deliveries market this year.

By Byun Hye-jin (hyejin2@heraldcorp.com)