GS Retail buys 1.5% stake in Kakao Mobility to build up capacity for superfast delivery

GS Retail Co. running South Korea’s No. 1 convenience store chain GS25 will invest 65 billion won ($55.2 million) to acquire a 1.3 percent stake in the country’s leading mobility platform operator Kakao Mobility to enhance superfast delivery system based on the latter’s big data and AI capacity.

Under a contract signed with Kakao Mobility on Wednesday, GS Retail will be able to advance its logistics network based on the big data on roads collected by Kakao Mobility.

The latest investment decision shows that GS Retail’s strong commitment to groom ‘quick-commerce (Q-commerce)’ as its core business. The partnership with Kakao Mobility is expected to help it create the optimized logistic efficiency at minimum logistics costs.

The Q-commerce market is still in the fledgling stage in Korea, considering the market size of 300 billion won as of last year versus 161 trillion won worth e-commerce market and 17 trillion won worth food delivery market.

Transaction on the speedy instant grocery delivery service “B Mart” run by the country’s top food delivery app Baedal Minjok since the launch in 2019 reached 140 billion won last year.

Industry experts now expect the Q-commerce market would grow to more than 5 trillion won in value by 2025. Based on the outlook, GS Retail has officially declared it is aiming to become an integrated logistics and distribution service provider after its merger with GS Homeshopping in July. It vowed to establish the infrastructure to launch its Q-commerce service to serve 15,000 GS25 stores and 330 GS The Fresh outlets.

As part of the efforts, the convenience store operator will focus on a faster two-hour delivery service for items at its convenience stores and supermarkets. In line with the plan, it acquired a 19.53 percent stake in Mesh Korea, the operator of delivery service provider Vroong, in April and the entire stake in the country’s No. 2 delivery app Yogiyo for 800 billion won in a consortium with two private equity funds.

The convenience store operator has already launched the industry’s fastest two-hour delivery service that is said to have limited scalability. The latest takeover, however, is expected to raise its competitiveness in the burgeoning ‘quick-commerce (q-commerce)’ market, according to analysts.

“Kakao Mobility has technical prowess in allocation of vehicles, route guide, real-time traffic calculation, real-time monitoring and data processing,” said a GS Retail official.

GS Retail shares closed 4.56 percent higher at 29,800 won in Seoul trading on Thursday.

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