Convenience stores lure consumers with cheaper parcel fees

[Courtesy of GS Retail]

South Korean convenience stores are attracting customers with cheaper parcel delivery service fees amid growing demand for the courier service especially with more second-hand transactions by individuals.

According to industry sources on Thursday, GS25, the convenience store chain operated by GS Retail Co., continues to see the convenience store-based delivery services that utilize its in-house logistics system thriving, accounting for more than 70 percent of the entire convenience store parcel delivery market.

Introduced by GS Retail in 2019, the delivery service allows customers to send and receive parcels at and through GS25 stores where they can also pick up their packages.

Despite slower delivery compared to traditional couriers, it is popular due to significantly low fares. Customers also like the services as they provide the convenience of easy pick-up at nearby convenience stores, even on Sundays or holidays.

The half-price delivery service rate for parcels weighing under 500 grams is 1,800 won ($1.4). As of May, the number of monthly half-price deliveries at GS25 surpassed one million transactions.

The service has seen skyrocketed growth, exceeding 10 million transactions last year with a 100-fold increase from around 90,000 transactions in its first year in 2019.

GS25’s half-price delivery now accounts for 65 percent of its entire delivery services.

“The half-price delivery service grew rapidly not only thanks to the much cheaper fare than regular delivery services but also because of the surge in contactless second-hand transactions after the pandemic,” said an unnamed official from GS25.

The half-price delivery service has the added benefit of attracting over 25 million customers to visit stores as both the sender and the recipient need to visit a GS25 store. This stimulates more purchases and results in additional sales estimated at over 50 billion won.

Another convenience store chain, CU, operated by BGF Retail Co., has also been expanding delivery services that utilize its in-house logistics system to 24.2 percent as of July, from about 1.8 percent in 2020.

Regular delivery services provided at convenience stores have also been growing.

The industry sees that there is demand for regular delivery services through convenience stores, particularly among female customers who want to enjoy the benefit of delivery all the way to their home while avoiding arranging pickup for delivery at their home for safety reasons.

Convenience store chain 7-Eleven’s regular courier service has seen a 30 percent increase in revenue in the second quarter compared to the same period last year.