Playing catch-up, Naver starts fresh-produce delivery
Naver is bringing together a pack of underdogs to go up against established fresh-food delivery players with its new Jangbogi service.
The portal is partnering with Homeplus, GS Fresh Mall, Hanaro Mart and Hyundai Department Store in rolling out the service as it seeks opportunity in a non-contact world.
Since Aug. 20, users of Naver’s grocery shopping platform have been able to select "fresh produce" under the "grocery shopping" section of its platform. They have been able to buy a wide range of products, including squid, cocktail shrimp and dried radish slices.
Naver’s members do not have to sign up for the service. They can place orders right away on the site. The portal seeks to bring its large user base of 40 million to its new online grocery shopping platform.
Jangbogi is designed to compete with Coupang, Market Kurly and Emart, the first movers and market leaders in fresh delivery.
With another big player in the game, the competition is greatly intensified. Coupang has been delivering groceries beyond Seoul, in cities across the country, such as Busan. Naver, which now has access to Hanaro Mart’s delivery network, is likely to expand nationwide as well.
“The evolving search patterns of Naver’s users have prompted us to start the online fresh-food delivery business,” said a Naver spokesperson on Sunday. “Unlike in the past, when the portal was purely used for search purposes, users have increasingly been using it for shopping as well. There have been many requests for a function that allows direct purchasing of daily necessities and groceries."
Retail industry experts project the same-day delivery service market to grow to 1.5 trillion won ($1.26 billion) by the end of this year, up 87.5 percent from 2019, when it was worth 800 billion won. The market was worth 400 billion won in 2018, and 10 billion won in 2015.
Industry insiders believe the new initiative is Naver’s attempt to capitalize on the effects of the Covid-19 outbreak. Kurly, which started the same-day delivery boom, and other companies, including Coupang and Shinsegae Department Store, have all experienced from twofold to fourfold on-year increases in daily delivery counts.
Some observers have raised doubts about the new Naver service, saying that it is not offering anything different and that it lacks its own delivery infrastructure. Naver's partners are also more traditional and less inclined to go for delivery services.
Naver expanded its e-commerce services over the past two to three years by adding more stores on the platform and introducing Naver Pay in 2015.
Despite the success of e-commerce in general, grocery delivery services are an area that even retail giants have not quite nailed down. The performance of Lotte On, an e-commerce app operated by Lotte Shopping, which was rolled out in April, has not been up to expectations. The recipe for success for conventional retail business has not worked well for online services, which have a separate set of criteria, including customer experience, product quality and diversity as well as delivery range and speed.
Although online grocery delivery is a challenging sector, Naver’s foray into the business is a threat to companies that focus on the service. The portal has the tools to grow its user base fast — a search bar, a simplified payment system and its existing members.
“Among all services available on our grocery delivery platform, the reception has been the best for the ‘shop from neighborhood’ service, which delivers produce from the region’s farmer’s markets,” Naver wrote in a statement.
BY HA SUN-YOUNG [email@example.com]