November 28, 2024

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Screenshot of Coupang Japan's website (Coupang Japan)

South Korean e-commerce giant Coupang is expected to withdraw from the Japanese delivery service market later this month and to focus more on expanding its business in Korea and Taiwan, according to news reports Sunday.

Japan's Nihon Keizai Shimbun, or more commonly known as the Nikkei, reported Saturday that Coupang Japan has decided to end its pilot food and household goods delivery service it has run over the past two years on March 21.

The pilot program, launched in June 2021, aims to deliver goods in 10 minutes in key districts of Tokyo, including Meguro and Setagaya, from nearby retail outlets, such as department stores or convenience stores.

"We decided to withdraw our business from Japan based on the results of the trial operation of the service," an official from Coupang Japan was quoted as saying in the report.

A Coupang spokesperson in the Korean office declined to further elaborate on the company’s Japan business.

"Instead of Japan, we are aiming to focus more on the domestic (Korean) delivery market as our market share is considered not big enough,” the official told The Korea Herald, citing Korea’s growth potential to become a market valued at some 700 trillion won ($530 billion) by 2025.

The official added that Taiwan is another top priority market where Korean-made products are popular, while demand for internet shopping is fast growing.

Coupang's withdrawal from the Japanese market follows that of one of its biggest competitors in food delivery service in 2021. Baemin withdrew from the country after five months of business and sold its Japanese corporation to German food delivery service Food Panda the same year.

With the pandemic-fueled delivery boom showing some sign of abating, experts say, Japan’s unique market trains make it especially hard for Korean e-commerce businesses to thrive there.

“Ultrafast services such as a 30-minute delivery appear to have failed to appeal to local consumers,” said Suh Yong-gu, a professor of business at Sookmyung Women's university.

“In the current endemic phase, demand for delivery services generally went down.”

Moreover, Suh explained that Japanese consumers are known to be wary of new services, referring to the "Satori generation" -- a Japanese language neologism used to describe a group of young people who are content with what they have and shun materialism.

"Most of the young customers in Japan, who are the key target of e-commerce business, are reluctant to accept new trends and services,” he said.

“Convenience stores in Japan are almost three times bigger than those in Korea and serve most of their daily necessities, which means little demand for delivery services.”

By Lee Yoon-seo (yoonseo.3348@heraldcorp.com)