South Korea may ease curbs on supermarket early morning deliveries

South Korean large supermarkets may see regulations restricting their early morning delivery services eased after 14 years, a prospect that has raised expectations within the retail industry. The potential to utilize nationwide offline stores as delivery bases could simultaneously expand service areas and boost online sales.

Industry insiders suggest that if regulations are relaxed, major retailers like E-mart, Lotte Mart, and Homeplus could transform their numerous physical stores into delivery hubs. Currently, early morning deliveries are largely restricted to online-only logistics centers that are not subject to operating hour restrictions. This change could significantly broaden the reach of these services.

Despite the anticipation of increased sales and customer reach, particularly in the competitive grocery sector, concerns about profitability persist. Early morning delivery is a low-margin business that incurs additional costs for nighttime labor, vehicle operations, and product sorting and packaging. Some estimate these operating costs can be 1.5 to 2 times higher than daytime deliveries.

Furthermore, the industry faces challenges from established players like Coupang, which already dominates the early morning delivery market. To compete effectively, large supermarkets would require substantial investments in automated facilities, order systems, and delivery fleets. The ongoing requirement for two mandatory monthly closures also presents a hurdle, as it would limit the use of stores as delivery bases on those days. Retailers are thus advocating for a simultaneous easing of mandatory closure regulations alongside the delivery service liberalization.