1. On January 22, 2024, it was reported that Kurly is set to make a significant entry into the Q-commerce business. According to a report by Chosun Biz, citing the distribution industry, Kurly plans to establish a Micro Fulfillment Center (MFC) in Daechi-dong, Gangnam District, Seoul, possibly by the following month. Vroong has been selected as the logistics partner, providing detailed insights into the plan.
  2. Kurly's entry into Q-commerce is not a new development. Investigations reveal that Kurly has been engaging with various logistics firms for its Q-commerce venture. Previous content has summarized the evaluations and potential of Kurly's Q-commerce business by current domestic distribution and last-mile delivery company officials. Kurly has reaffirmed its stance on entering the Q-commerce business.
  3. For Kurly, which has been operating primarily on overnight deliveries, Q-commerce is a new venture. This operation requires both infrastructure for logistics hubs at urban customer touchpoints and a network for fast deliveries. Kurly has been actively searching for logistics partners capable of swift deliveries.
  4. Recent media reports have commonly pointed to 'Vroong' as the partner. Vroong, acquired by hy (formerly Korean Yakult) in April of the previous year, originates from Mesh Korea. It has functioned as a delivery partner for CJ Olive Young's same-day delivery service 'Today's Dream' and has a precedent of establishing a joint venture with Oasis for Q-commerce, albeit with some issues.
  5. However, Kurly has stated that "no detailed decisions have been made regarding the operation of Q-commerce, including any agreement with Vroong." This includes decisions about where the logistics hubs will be operated, whether to build its own or use a partner's hub, whether these will function as MFCs or as Transfer Centers (TCs), and which company will be the logistics partner for Q-commerce.
  6. CONNECTUS inquired with Vroong, rumored to be the chosen partner for Kurly's Q-commerce, about the selection and operational method. However, they received a non-committal response, and any updates will be added to this content as confirmed.
  7. In summary, while it's confirmed that Kurly intends to enter Q-commerce and has been in touch with potential logistics partners, specific operational methods have not been determined yet. The following sections will consolidate the skepticism and optimism of industry professionals regarding Kurly's entry into Q-commerce.

Skepticism: Can the Costs Be Managed?

  1. Skeptics express concerns over the substantial investment costs Kurly might need to establish itself in Q-commerce. Especially, if Kurly chooses to build and expand urban logistics hubs like MFCs, as recent reports suggest, the operational costs, including rent and inventory management, would be significant.
  2. Very few domestic companies profit from building MFCs for quick commerce. CJ Olive Young is one of the few examples, continually expanding its MFCs while maintaining profitability. However, even CJ Olive Young didn't start with MFC construction from the beginning of its Q-commerce venture. Instead, it utilized its existing offline store network to keep the cost structure as light as possible.
  3. Other successful examples like Woowa Brothers' B-Mart, based on MFCs, have continuously faced concerns about their high-cost structure. Even Delivery Hero, the parent company of Woowa Brothers, only recently announced a profit margin of 1.1% relative to the transaction volume for its D-Mart (including B-Mart), part of its Q-commerce business. This profit was achieved only after significant downsizing of urban logistics hubs and accepting a 22% decrease in transaction volume compared to the previous year.
  4. Apart from CJ Olive Young and B-Mart, the scenario is even more dire. Coupang Eats Mart, similar to B-Mart, has downsized its Q-commerce operation points post-pandemic. SSG GO, an MFC-based Q-commerce operated by Emart, ultimately opted to discontinue its service. Considering these circumstances, there are doubts about Kurly's financial leeway to invest in Q-commerce, especially as it reported a monthly EBITDA profit in December 2023 but still faces an accumulated operating loss of 119.1 billion won up to 2023.
  5. The relatively low margin rate of Kurly's key categories, such as meal kits and fresh food, and the high level of difficulty in inventory management were highlighted. Compared to overnight delivery, the high cost of delivery services raises questions about Kurly's ability to bear these costs until reaching its sales targets.
  6. If Kurly forms a partnership with a delivery agency, it will need to establish measures to maintain service quality during shortages of riders. This is a relatively unfamiliar territory for Kurly, and opting to build its own rider network would only add to the already heavy cost structure.
  7. B-Mart addresses related issues through its logistics subsidiary, Woowa Youths, which has its own delivery network and operational capabilities. CJ Olive Young avoids risks by contracting with multiple delivery partners simultaneously. Recently, it has strengthened its cooperative relationship by investing directly in Chain Logis, responsible for Today's Dream MFC same-day deliveries.