GS Retail considers acquiring Yogiyo Firm aims to beef up its grocery delivery business

Translated by Kim So-in 공개 2021-07-20 08:04:21

이 기사는 2021년 07월 20일 08:00 더벨 유료페이지에 표출된 기사입니다.

GS Retail is expected to beef up its fresh food delivery business as it has been mentioned as the potential buyer of Yogiyo, Delivery Hero’s South Korean food delivery unit.

GS Retail is putting efforts to strengthen its quick commerce business by combining its online and offline logistics infrastructure through a merger with GS HomeShopping. Quick commerce refers to online retail businesses where customers can order items and receive them on the same day.

GS Retail is in talks with Delivery Hero to take over Yogiyo jointly with Affinity Equity Partners and Permira, industry sources said Friday. Delivery Hero has put Yogiyo on the market earlier this year in compliance with the conditions put forward by the Korea Fair Trade Commission (KFTC) last year to close its acquisition of Yogiyo's bigger rival, Baedal Minjok.

GS Retail’s successful acquisition of Yogiyo could further strengthen its competitiveness in the quick commerce market. Quick commerce companies typically aim for 30-minute delivery service. GS Retail utilizes its convenience store chain GS25 and GS Supermarket. Yogiyo introduced Yo Mart service.

After the merger with GS HomeShopping, GS Retail operates 60 distribution centers across the country, including 31 offline distribution centers, three digital commerce distribution centers, two homeshopping distribution centers, and 24 dedicated delivery centers.

GS Retail analyzed that it can access to 99% of the Korean population within two hours after its integration of logistics infrastructure. The company plans to further expand its logistics infrastructure by investing about 430 billion won ($374 million) to build six new logistics centers by 2025.

GS Retail also acquired a 19.53% stake in Mesh Korea, the operator of delivery service provider Vroong, last year. Mesh Korea will launch a quick commerce joint venture with online grocery delivery startup Oasis Market.

GS Retail will be able to enhance competitiveness by diversifying delivery platforms to distribute products. It can also secure a work force for its quick commerce delivery. GS Retail launched Woodel, a delivery platform dedicated to GS25 and GS Supermarket.

Equipped with logistics infrastructure, GS Retail is expected to increase its competitiveness in the grocery delivery market through partnerships with delivery companies.

GS Retail’s strength lies in offline stores of GS25 and GS Supermarket, which can be used to provide last-mile delivery services. The company can challenge the nation’s leading online grocery delivery platform Kurly.

In May, GS Retail chief executive officer Huh Yeon-soo said that GS Retail will compete with Kurly rather than Naver and Coupang, by strengthening its fresh food delivery services.

The nation’s online fresh food delivery market grew by 60% to 43.4 trillion won in 2020 from a year earlier, according to industry sources. It is expected to grow further as it only accounts for 20% of the entire food market, they said.

An official at the company said there is nothing he can confirm regarding GS Retail’s participation in the Yogiyo deal. (Reporting by Hyo-beom Lee)
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