[비즈한국] SSG.com has partnered with CJ Logistics000120 to expand its dawn delivery service. As this is the first collaborative outcome between the two companies since Shinsegae and CJ Logistics signed a business agreement last June, the industry is closely watching what kind of synergy they will produce. However, prevailing sentiment among customers currently using the service is one of disappointment, as reports of delivery delays continue to plague a service where speed is the core value.
Attempting a comeback in the Chungcheong region after 2 years, but the atmosphere is...
Since the beginning of this month, SSG.com has started expanding its dawn delivery coverage. The service has launched in the Chungcheong region, including Daejeon and Sejong, and is expanding into the southern Gyeonggi region, including Pyeongtaek, Dongtan, Hwaseong, Hanam, and Osan. The Chungcheong region is a place where SSG.com had previously introduced and then abandoned dawn delivery. In the case of the Chungcheong region, SSG.com had previously operated the service by leasing logistics centers, but eventually decided to suspend delivery in 2022 due to deteriorating profitability caused by demand not meeting operating costs.
The reason SSG.com was able to return to dawn delivery in the Chungcheong region after about two years is thanks to its collaboration with CJ Logistics. Last June, Shinsegae Group and CJ Group signed a Memorandum of Understanding (MOU) to form a business alliance and promised logistics cooperation. In this process, plans to entrust the logistics operations of Gmarket and SSG.com to CJ Logistics were mentioned, and the work of transferring dawn delivery logistics to CJ Logistics was carried out. An official from SSG.com stated, "We have expanded our dawn delivery service as we transferred logistics to CJ Logistics. We plan to continue expanding the dawn delivery service coverage area in the future."
Industry interest in the synergy between SSG.com and CJ Logistics is also growing. An industry insider said, "Since they have switched from an in-house logistics model to a third-party logistics model, we are watching with interest to see how much synergy the two companies will create."
Unfortunately, the initial atmosphere is not good. It has been confirmed that the dawn delivery service via CJ Logistics frequently fails to meet delivery times, leading to a barrage of customer complaints. One customer expressed frustration, saying, "The groceries I ordered for my children's breakfast arrived after 10 a.m. The children went to school without eating a proper breakfast. If it's delivered at this time, doesn't it defeat the purpose of dawn delivery?" Another user said, "It didn't arrive on time, and the products arrived completely thawed. I was happy that dawn delivery became available, but I don't think I'll use it in the future."
SSG.com promotes that if you use the dawn delivery service, you can receive products before 7 a.m. the next day if you order before 11 p.m. However, as a significant number of customers using the dawn delivery service through CJ Logistics are experiencing delivery deadline delays, complaints are flooding the customer service center. Incidents are continuing where products that should have been delivered in the early morning arrive near noon or are delayed until the afternoon.
An industry insider pointed out, "It appears that there is a severe shortage of delivery personnel for dawn delivery. It won't be easy to quickly increase manpower during early morning hours." Another industry insider remarked, "It would have been better if SSG.com had chosen an outsourcing model for logistics from the beginning. It seems that problems are occurring because they are outsourcing something they used to handle themselves."
SSG.com explained that the delivery delay issue is a temporary problem that occurred in the early stages of the service. An SSG.com official said, "Although delivery delays occurred in some regions, it is now operating normally," adding, "We are reorganizing our logistics system through collaboration with CJ Logistics. We will do our best to stabilize the service so that more customers in wider areas can receive dawn deliveries."
Logistics costs reduced, but "Investment is necessary to increase competitiveness"
Dawn delivery is considered a business where it is difficult to secure profitability due to high labor costs, inventory management, and the spoilage rate of fresh food. In 2022, Lotte On also suspended its dawn delivery business, and companies like Hello Nature and FreshEasy also withdrew from the dawn delivery market.
Lee Jong-woo, a professor of business administration at Ajuga University, explained, "Dawn delivery is a business that requires companies to invest a lot of costs. You need to secure logistics centers, considerable costs go into delivery personnel and vehicles, and inventory costs are high," adding, "Dawn delivery companies jumped into the market to keep Coupang in check, but ended up giving up due to the burden of initial investment costs."
The industry speculates that SSG.com is re-entering the dawn delivery market to boost the competitiveness of its online delivery service. Song Sang-hwa, a professor at Incheon National University's Graduate School of Logistics, analyzed, "You cannot assume there will be a winning chance in the e-commerce market just by growing dawn delivery," adding, "To properly compete in the e-commerce market, you must have a proper portfolio, and this eventually leads to the completeness of networks and services. You could grow the dawn delivery sector in the sense of completing online delivery."
Positive evaluations are heard regarding the collaboration with CJ Logistics itself. Professor Lee Jong-woo said, "In a situation where capital capacity is not currently good, the fact that they can quickly expand delivery service areas using CJ Logistics' logistics centers without spending huge investment costs will be a big advantage." Professor Song Sang-hwa also evaluated, "Since the dawn delivery service is a business that requires significant investment, it is reasonable to entrust it to a specialized company that has secured a logistics network."
However, it is unclear how much competitiveness they will have in the market. Seo Yong-gu, a professor of business administration at Sookmyung Women's University, said, "Huge investment is needed to win in the speed competition. I'm not sure if SSG.com currently has the capacity to support that level of investment."
SSG.com continues to suffer from poor performance. Although it was launched as a separate corporate entity after being spun off from E-mart139480 in March 2019, it has never escaped the swamp of deficits. Last July, it implemented voluntary retirement for the first time, and it will relocate its current Gangnam headquarters to Yeongdeungpo, Seoul, in February next year to cut costs.
Professor Lee Jong-woo pointed out, "SSG.com found a safe path and collaborated with CJ Logistics, but for sustainable growth, investment must continue in areas such as personnel and services. If aggressive investment does not follow, it will eventually end up in a shape that is neither one thing nor the other."