Naver offers platform for CJ in fight vs Coupang

Naver Corp. is shaking up South Korea’s online shopping market led by Coupang Inc. as it has launched a next-day delivery service to challenge Coupang’s Rocket Delivery.

With the fast delivery service, the country's largest online platform is emerging as an alternative to Coupang. 
 
Particularly, it has given CJ Cheiljedang Corp. a breath of fresh air after Coupang dropped CJ’s major products from its sales list as they have been in dispute over how to share profits since late last year.

The country’s leading food company recently added its products to the group of goods of which Naver guarantees next-day delivery, according to retail industry sources on Friday. 

CJ is now stepping up marketing for its staple products such as precooked rice, dumplings and Spam on the online mall. 

Next-day delivery is offered on orders placed by midnight like Coupang's Rocket Delivery introduced in 2014. 

If deliveries are delayed, Naver will compensate customers with reward points. 

LG H&H Co. ’s products are now available for Naver’s next-day delivery service as well. The daily necessities producer was once in court wrangling with Coupang over setting the prices of its products. 

Other Korean online malls such as 11Street and TMON Inc. deal with CJ products as well, but they don’t guarantee an exact delivery time.

Coupang, listed on the New York Stock Exchange, directly purchases and stores products at its warehouses like Amazon.com.

By contrast, Naver will not build fulfillment centers for the companies on its platform. Rather, the companies need to run their own warehouses. 

As an example, CJ Logistics Corp. will build stockpiles of popular products at its fulfillment centers so that it can immediately ship CJ Cheiljedang’s products ordered through Naver.

Despite its leadership in South Korea’s online marketplace, Naver lags its rivals in delivery service. Typically, it takes two to three days for the products ordered through its mall to be delivered. 

Korean e-commerce players such as Shinsegae’s SSG.COM, Kurly Inc. and Oasis Corp. offer dawn, same-day, or next-day delivery services. 

“Coupang holds the final say on prices because it buys products directly from suppliers,” said a retail industry official. 

“On Naver’s shopping platform, companies can open their brand stores and set prices as they wish. They will naturally lean toward Naver.”

Being at its early stage of fast delivery service, however, its next-day delivery is not available on Sundays and public holidays. Also, the products are mainly limited to processed products.

Since picking e-commerce as a new growth pillar, Naver has been trying to outstrip market leaders such as Coupang.

But it will remain a pure sales platform, teaming up with logistics companies to strengthen its delivery infrastructure, its senior officials said.

Naver’s commerce business posted 21% growth on-year to 1.8 trillion won ($1.4 billion) in 2022 sales, with over 40 trillion won worth of products traded on its platform.

Write to Jong-Kwan Park and Kyeong-Je Han at pjk@hankyung.com

Yeonhee Kim edited this article