New SSG.com distribution hub makes bread

SSG.com’s third distribution center in Gimpo, Gyeonggi. [SSG.COM]

SSG.com, the online unit of Shinsegae Group, opened its third distribution center today in Gimpo, Gyeonggi.

In addition to being a distribution center, the new facility will also be a bakery.

Located right next to its second distribution center, the third Next Generation Online Store, or NEO003, is able to handle up to 35,000 packages per day. At 52,549 square meters (565,632 square feet), it is 20 percent more efficient than the second NEO, according to SSG.com on Thursday.

Similar to NEO002, 80 percent of the processes handled inside NEO003 - from receiving orders to delivery - will be automated. SSG.com would not reveal the level of automation inside its first NEO in Yongin, Gyeonggi.

The new distribution center will help SSG.com expand the number of dawn delivery orders to 10,000 packages per day starting early next year from the current 5,000. SSG.com will also expand its coverage areas to deliver to all the districts of Seoul and the capital area. It currently delivers to 18 districts in Seoul and four districts in Gyeonggi.

By the end of next year, SSG.com expects it to be able to handle 20,000 packages per day with the coverage area expanding to the entire capital area.

With demand for breads and pastries rising, SSG.com opened a baking center inside NEO003. It will bake bread twice a day.

SSG.com said it had envisioned a distribution center that not just stocks products, but also produces food. A total of 8,500 loaves are baked daily at NEO003.

The online sale of bread from January through November jumped 180 percent on year.

Baking bread is part of SSG.com’s marketing strategy of offering fresh food, the company said in a statement.

“NEO is no longer a distribution center, but an online store,” said Choi Woo-jung, CEO of SSG.com in a statement. “It will gradually shift the online retail paradigm. If there is a NEO online store near the areas where people live, that means they can receive freshly baked bread and fresher food products at the time they want, increasing their choices and improving convenience.”

Shinsegae last year was unable to build a distribution center in Hanam, Gyeonggi, following a strong backlash from Hanam residents.

BY JIN MIN-JI [jin.minji@joongang.co.kr]