In quick-commerce arms race, speed is just the beginning

Industry

Published: 13 Jul. 2021, 17:37 Updated: 13 Jul. 2021, 19:46

In quick-commerce arms race, speed is just the beginning

A model receives products she ordered via CU’s quick commerce service from a delivery rider. [BGF RETAIL]

Retail competition is now so fierce in Korea that overnight delivery is no longer enough. Quick commerce is fast becoming the standard, with goods arriving within an hour of ordering.

It is offered by food delivery companies, e-commerce operators and convenience stores.

As quick commerce is still in its infancy, different companies are trying different services and seeking to arrive at a solution that works for them and the customers.

BFG Retail, which runs CU, is adding another partner for its own service, which is run from the convenience stores.

It said Tuesday that customers can order quick-commerce items through NHN Payco, a payment gateway.

BGF Retail started in quick commerce in 2019 in cooperation with the Yogiyo food delivery app. It is now working with Naver and Kakao Talk.

Type CU into any of the apps, and items available at nearby CUs for speedy delivery will be displayed.

The CU-Payco service is available at 2,000 CU stores nationwide, and customers can order from any of the stores within 1.5 kilometers (0.9 mile) of their location.

CU said it cannot guarantee delivery times because third parties handle the logistics. Customers also have to spend at least 10,000 won ($8.73) per order.

Last week, Coupang started testing quick commerce in select areas in Songpa District, southern Seoul.

It guarantees 10-to-15-minute delivery – much shorter than most quick commerce operators – and does not require a minimum order.

Baedal Minjok, a food delivery app, offers delivery within 30 to 40 minutes and has a 10,000 won minimum.

“Quick commerce is still in its early phase,” said Im Su-yeon, an analyst at Hi Investment & Securities. “But as the number of players increases and customers become used to the service, it is expected to become as common as early morning delivery.”

Customers in the past demanded a wide product range and cheap prices from online shopping, but they expect more these days.

“Unique services will become a key to competitiveness,” Im added.

Kim Seong-mo, a spokesperson for BGF Retail, said, “CU tries to provide distinct quick commerce by making it available on multiple platforms.”

Baedal Minjok’s B Mart quick commerce promotes itself as the “pioneer of the niche market.”

Since the service was initiated in November 2019, it increased the number of warehouses and items handled. As of July 2020, it sold around 5,000 types of items from around 20 to 30 warehouses in metropolitan areas.

Demand for quick commerce is expected to rise through live commerce videos, a service similar to home shopping but streamed live on the internet.

Some companies, like delivery company Vroong, partnered with live commerce platforms in which hosts promote quick delivery of the items they are selling. Vroong is currently in talks with numerous commerce platforms to create synergy effects with live commerce.

Delivery Hero, GS Retail and Mesh Korea are among others that offer quick commerce.

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