E-commerce boosts South Korea home delivery business

Seoul, Jan 11 (Asia Pulse) - E-commerce has produced many new winners in business in Korea, and one of them is door-to-door delivery service.

Home delivery service is fast becoming one of the leading businesses in the 21st century as an essential part of the e-commerce system. The volume of the market, which was 100 billion won (US$87 million) in 1996, 170 billion won in 1997, 300 billion won in 1998 and 500 billion won last year, is expected to reach 1 trillion won this year.

Existing home delivery companies are seeking to protect and expand their businesses as many large-sized companies are rushing to get a piece of the lucrative market. Hyundai Logistics, whose sales grew 59 percent to 80 billion won last year, changed its Korean name to one meaning Hyundai Home Delivery January 1.

The company will employ some 100 people and invest 50 billion won in the business this year, including 30 billion won to expand terminals and sales offices and 10 billion won to buy vehicles and related facilities. This year's annual sales will grow 50 percent or more to 120 billion won.

Korea Express, one of the three main players in the industry along with Hyundai Logistics and Hanjin Transport, also announced Thursday that it will invest 30 billion won to expand its home delivery facilities this year and finalize a strategic co-operation agreement with UPS soon.

The company will launch an Internet shopping mall this month through tie-ups with Internet-related firms. Hanjin Transport, which pioneered the home delivery business in Korea in 1992, will invest 23 billion won in the industry this year, an amount half of the company's total investment of 46 billion won. It hopes to raise the share of the business in its total sales from 15 percent to 30. It will set up distribution terminals for home delivery only in nine areas this year, including Kuri and Ichon, Kyonggi province, and Chungju, North Chungchong province, to increase the number of domestic home delivery terminals to 50.

Hanjin will introduce the global positioning system (GPS) in the first half of next year so customers can track their packages through the company's Web page. The Samsung Group is also preparing to enter the promising market through Everland. It has organised a task force for the business and plans to make full use of Everland's fleet of over 100 trucks. LG will enter the sector through affiliate DACOM, which announced that it will strengthen e-commerce and is now making efforts to employ related human resources. SK Global will secure 200 delivery shops nationwide within five years.

Cheil Jedang's general distribution unit CJ GLS, which jumped into the industry last month, will invest 50 billion won annually until 2004 to secure over 350 bases for door-to-door delivery. Uni-Ocean Express, the Korean general agent for DHL, has also officially announced its advance into the market. "More and more companies are interested in the home delivery market, which is expected to keep growing 100 percent per year for the time being thanks to the fast-expanding e-commerce market," an industry source said.