Korean retailers ramp up fulfillment centers to hold AliExpress in check

South Korea’s leading retailers, including Coupang Inc., are ramping up their logistics capacities to counter aggressive forays into the country by Chinese online shopping giants such as AliExpress and Temu.

Coupang, Korea’s top e-commerce platform operator, said on Tuesday it will build nine fulfillment centers across the country by the end of 2025 and directly hire over 10,000 employees for the centers.

The move comes less than six months after it announced in March that it would offer its Rocket Delivery, or next-day delivery service, nationwide, with 3 trillion won ($2.2 billion) in investment.

The locations of Coupang's new logistics centers are Gimcheon and Chilgok in North Gyeongsang Province, Jecheon in North Chungcheong Province, Busan city, Icheon in Gyeonggi Province, Cheonan in South Chungcheong Province, South Daejeon city, Gwangju city and Ulsan city.

Of the nine, the logistics centers in South Daejeon and Gwangju are expected to begin operations as early as next month, with 3,300 newly hired employees.

Since launching the Rocket Delivery service in 2014, Coupang has invested 6.2 trillion won in its logistics network, establishing over 100 logistics centers in Korea.

Thanks to its aggressive distribution network expansion, the company posted over 30 trillion won in sales last year, overtaking Korea’s top retail distributor E-Mart Inc.

BGF BREAKS GROUND ON NEW LOGISTICS CENTER

Offline retailers are also increasing their logistics investments.

BGF Retail Co., the operator of Korea’s top convenience store CU, on Tuesday broke ground on a new logistic center in Busan, a southeastern port city.

With a 220 billion won investment, the company will build a logistics center on a 120,000-square-meter plot of land at Busan’s International Industrial Logistics Complex. BGF plans to begin operations in the second half of 2026.

While BGF is not in direct competition with AliExpress, its primary customers are in their 20s and 30s, overlapping with the customer base of the Chinese e-commerce platform.

BGF said the logistics center will also serve as an export base to send goods overseas – to countries where it operates CU outlets such as Mongolia, Malaysia and Kazakhstan.

DAISO

In July, Asungdaiso Corp., which operates Korean dollar store chain Daiso, began construction of a logistics center in Sejong City, with about 400 billion won in investment.

Asungdaiso plans to build an integrated logistics network in Sejong to handle not just the supply of products to Daiso stores nationwide but also orders from its online shopping mall, Daiso Mall.

Last December, Asungdaiso acquired a controlling stake in Daiso from Japan’s Daiso Industries Co. to fully own the dollar shop chain.

ALIEXPRESS TO SPEND OVER $1 BILLION IN KOREA

In March, AliExpress said it would spend 1.5 trillion won ($1.1 billion) to strengthen its online business in Korea, including building a large-scale logistic center.

Owned by Chinese tech giant Alibaba, AliExpress plans to store not only Chinese products ordered online by Korean consumers but also Korean brand goods sold on its shopping mall for quick deliveries to buyers across Korea.

In recent years, Chinese e-commerce giants have increasingly attracted Korean consumers to their online platforms with cheaper products and sometimes faster deliveries than Korean rivals such as Coupang, Naver Corp., 11Street, SSG.COM and Gmarket.

Temu, a popular Chinese discount e-commerce platform that landed in Korea in 2022, has cracked homegrown players’ dominance in the online retail space.

AliExpress and fashion e-retailer Shein are also luring Korean consumers with ultra-low prices.

Write to Jae-Kwang Ahn at ahnjk@hankyung.com
In-Soo Nam edited this article.