Market Kurly, a South Korean online food store, first began offering early morning delivery services in 2015. (image: Market Kurly)
SEOUL, Jul. 23 (Korea Bizwire) — Large retailers are struggling with the aftereffects of “dawn delivery.”
With an increasing number of consumers preferring to have their purchases delivered the morning after they are ordered, related sales are increasing. However, losses are also growing.
The main reason behind the losses is packaging expenses.
Since most early-morning deliveries are for food and beverages, retailers inevitably have to spend a vast amount of money to maintain the freshness of the products they sell.
Market Kurly, a delivery company for fresh food, saw sales grow 3.4 times to 157.1 billion won (US$133 million) in 2018 from 46.5 billion won in 2017.
On the other hand, packaging costs also increased 4.5 times from 3.9 billion won to 17.7 billion won over the same period.
As operating costs have increased, some companies have reduced their fresh food business altogether.
WeMakePrice Inc. and TMON Inc. have both stopped delivering fresh food and no longer provide a direct purchase service.
This is why retailers have been striving recently to reduce packaging costs. Market Kurly introduced eco-box, an eco-friendly refrigerator box made from recycled paper.
SSG.com, an integrated shopping mall operating under the Shinsegae Group that started dawn delivery services early last month, has produced its own “cooling bag” that that is reusable.
However, some point out that the development of eco-friendly packaging materials could lead to additional costs.
Critics cited the difficulties in finding replacements for boxes and ice packs as the reason for their concern.
D. M. Park (dmpark@koreabizwire.com)
