Coupang to resume Rocket Delivery for LG H&H; ends 5-year feud

Coupang Inc., South Korea’s leading online retailer, said on Friday it will resume the same or next-day delivery service, dubbed “Rocket Delivery,” for LG H&H Co.'s daily necessities, beauty products and drinks from next week, ending their five-year dispute over promotional costs and selling price cuts. 

The announcement comes as the Korea Fair Trade Commission (KFTC) is slated to rule this month over Coupang’s complaint against the antitrust body’s imposition of 3.3 billion won ($2.5 million) in fines in 2021 over its business practice with LG H&H, formerly LG Household and Health Care.

“If LG H&H sells its beauty products, drinks and daily necessities using Coupang’s Rocket Delivery infrastructure, both companies will be able to create great synergy,” said a Coupang official.

Their reconciliation comes as the country’s largest online portal Naver Corp. and AliExpress under Alibaba.com are upping the ante in the same-day delivery market. Last year, they launched same-day delivery services, respectively.

Retail industry watchers said Coupang first reached out to LG H&H to end their dispute. They are now keeping an eye on whether Coupang will go further to settle a feud with CJ CheilJedang Corp. on similar issues.

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Coupang has been wrangling with CJ CheilJedang over how to share profits since 2022 and dropped the food maker's major products from the list of Rocket Delivery items.

CJ and LG H&H are now using Naver's express delivery service.

Further, LG H&H’s products are top-selling items in the categories of daily necessities and drinks on Coupang. LG sells Coca-Cola and Sunkist’s drinks in South Korea.

Coupang will also offer the Rocket Delivery for LG H&H’s high-end cosmetics brands for the first time. The brands of O HUI, The Whoo and sum 37 under LG H&H will be added to the “Rocket Luxury” category dedicated to high-end beauty products.

The dispute between Coupang and LG H&H dated back to May 2019, when LG H&H filed a complaint against Coupang with the KFTC. LG argued the e-commerce platform unilaterally canceled orders and terminated contracts.

In August 2021, the KFTC fined Coupang 3.3 billion won along with a corrective order for abusing its position with its suppliers.

At the time, it said Coupang forced 101 suppliers, including LG H&H, to raise the selling price of its products on other online malls, while keeping their prices unchanged on Coupang.

KFTC also found that the e-commerce player had sold advertisements to the suppliers and passed on discount costs to them between 2017 to September 2020 in an attempt to reduce losses caused by its “lowest price guarantee” promotion.

In February 2022, Coupang filed a complaint in protest of the decision, on which the commission is due to deliver a ruling this month.

Write to Jae-Kwang Ahn at ahnjk@hankyung.com
 


Yeonhee Kim edited this article.