SEOUL (THE KOREA HERALD/ASIA NEWS NETWORK) - In recent years, South Korea's door-to-door delivery service has evolved to allow customers to expect their parcels the very next day, or within two to three days at maximum.
While much of this dynamic still stands, e-commerce companies and retail giants have rolled out a "dawn delivery" service, striving to cut down delivery times even further.
Dawn delivery allows orders to be placed as late as midnight, with deliveries guaranteed to arrive by 7am the next day. Daily necessities and perishable fresh food products are popular items for dawn delivery.
According to the industry, the dawn delivery market was valued at around 10 billion won in 2015. Although the service is currently available only in Seoul and some parts of Gyeonggi Province and Incheon due to lack of logistics infrastructure, the market value is estimated to have already reached 400 billion won (S$484 million) last year.
An online grocery start-up Market Kurly first introduced the concept of dawn delivery in 2015. Its "Saetbyul delivery" delivers food products by 7am if customers order before 11pm the night before.
While next-day delivery ensures the goods reach customers within the shortest hours possible, dawn delivery sets the timeline to the very next morning.
According to Market Kurly, products are packed and dispatched from its logistics centre in Songpa-gu to some 480 deliverymen by 2.30am daily. As of August last year, an average of 12,000 orders were made every day for Saetbyul delivery.
Thanks to increasing consumer demand for fresh food in the morning, the company saw 46.5 billion won in sales in 2017, about 167 per cent year-on-year increase. It forecasts some 160 billion won in sales in the last year.
Market Kurly remains the dominant leader in the dawn delivery market, being responsible for some 79.5 per cent of the logistics as of August last year, according to Statistics Korea. The company has expanded its horizon by offering not only fresh food, but also side dishes, home-meal replacement kits for parties, and desserts.
Major retail companies have joined the dawn delivery race.
In October, Coupang rolled out Rocket Fresh, which ensures delivery of some 4,200 fresh food and other items by 7am the next day. The company operates its some 3,000 deliverymen or Coupang Man into teams with different work schedules. For dawn delivery, a Coupang Man works from 10pm to 8am.
Last year, E-mart launched a similar offering, SSG Good Morning, with a preferred delivery window of between 6am and 9am or 7am and 10am.
The company has recently secured one trillion won from a foreign investment firm and a private equity firm in October to strengthen its e-commerce business. It currently runs logistics centres in Yongin and Gimpo, which are equipped with automation facilities, stock prediction and management system. The company ultimately aims to set up a system to send products here for same-day or three-hour delivery.
Another retail giant, Lotte, has chosen to merge two of its affiliates to strengthen its logistics capacity.
In November, it merged its two logistics affiliates Lotte Global Logis and Lotte Logistics, giving birth to a logistics company with five trillion won of annual sales and three trillion won of assets. It is also working to build the country's largest logistics centre in Jincheon, North Chungcheong Province.
Meanwhile, market insiders said dawn delivery had become a costly prerequisite for retailers. The cut-throat competition in the dawn delivery market has also consistently raised questions about the hours and conditions of delivery work, pushing respective companies to adapt their shift systems.
"For such a system to settle, it requires a lot of money," an industry insider from an e-commerce company told The Korea Herald. He added that the cost of building logistics centres with cold chain systems, which manage stock in a temperature-controlled supply chain, begins at several hundred million won.
Said another industry insider: "Who dominates the e-commerce market with next-morning delivery service will be a matter of which company establishes the larger logistics centres the fastest."