Shinsegae aims to deliver more, faster with CJ Group partnership

The agreement between Shinsegae and CJ Group will expand next-day delivery for its online shopping platforms, along with expanded joint effort in other areas.

CJ Corporation CEO Kim Hong-ki, left, and Im Young-rok, CEO of Shinsegae Property and Josun Hotels & Resorts, pose for a photo at the two companies’ memorandum of understanding (MOU) signing ceremony held on Wednesday. [SHINSEGAE]

Korean retail giants Shinsegae and CJ Group have struck up a partnership to cooperate on logistics, product development and the media business to compete with domestic and ever-expanding Chinese e-commerce players.

Under the memorandum of understanding signed on Wednesday, CJ Logistics will handle the same-day shipping of Shinsegae's e-commerce platform Gmarket. Shinsegae will start using CJ Logistics' O-NE delivery system from July at the earliest.

The delivery system is expected to offer a longer time frame for the placement of next-day shipping orders than Gmarket’s current Smile Delivery system.

With Smile Delivery, customers can place orders until 8 p.m. on Gmarket for guaranteed next-day delivery; with O-NE, customers will have four more hours to place their orders, until midnight, according to Shinsegae.

Gmarket plans to persuade the sellers on its platform to agree to the next-day shipping development by offering promotional benefits.

Shinsegae’s online grocery shopping mall, SSG.com, is also in discussions with CJ Logistics to employ the company’s delivery services for its SSG Delivery same-day shipping service and its early morning delivery service as well as the management of its logistics centers. The online platform will sell its distribution centers in Gimpo and Gwangju in Gyeonggi to CJ Logistics.

With multiple Shinsegae affiliates using CJ Logistics' shipping network, SSG.com expects to save on delivery costs through the linked network.

By putting its logistics in CJ's hands, SSG.com says it will turn its focus on its grocery division. Currently, Coupang leads the market in early morning grocery deliveries, while Market Kurly trails behind in second and SSG.com in third.

CJ Logistics, meanwhile, will be able to benefit by expanding its third-party logistics business.

CJ CheilJedang will also work with Emart to launch more “affordable” products. The two firms, along with Gmarket, released 13 food items from CJ CheilJedang brands Bibigo and Hetbahn, including new dumpling flavors and eco-friendly packaged instant rice exclusively on their platforms in August before they reached other platforms.

Shinsegae and CJ Group will also collaborate in the media content business, for instance utilizing Shinsegae’s large offline presence to feature CJ Group’s entertainment content. CJ owns CJ ENM, an entertainment and mass media production and distribution business that also runs the television network tvN, as well as CGV, Korea’s largest theatre chain.

The two groups are also discussing a merger of their membership benefit programs. Shinsegae currently operates the paid membership program Shinsegae Universe Club that allows customers to rack up points by buying from the group's department stores, Emart, SSG.com, Gmarket, Shinsegae Duty Free and Starbucks; while CJ Group’s CJ One program operates in CGV and Olive Young, Korea's largest beauty product retail chain.

BY KIM JU-YEON [kim.juyeon2@joongang.co.kr]