All data are based on the daily closing price as of December 3, 2024

Shinsegae Group and CJ Logistics Forge Partnership to Streamline E-Commerce Operations

Collaboration aims to reduce delivery costs, enhance product offerings, and explore media synergies
c 000120.KO s 004170.KO e 139480.KO c 079160.KO c 097950.KO c 035760.KQ Mid and Small Cap 2000 Consumer 250 K-Pop Entertainment 100
Share this on

Retail giant Shinsegae Group is set to outsource delivery services and logistics management for its e-commerce platforms, including SSG.COM and Gmarket Inc., to South Korea’s leading logistics company, CJ Logistics Corp. This strategic partnership was formalized through a memorandum of understanding (MOU) signed on Wednesday by executives from Shinsegae’s E-Mart Inc. and Shinsegae Property Co., alongside representatives from CJ Logistics and CJ CGV Co., a multiplex cinema chain.

The collaboration will focus on enhancing logistics, food, and media operations. By leveraging CJ Logistics’ capabilities, Shinsegae aims to cut delivery costs and refocus on sales and marketing, thereby gaining a competitive edge in the fast-growing grocery delivery market.

CJ Logistics stands to benefit from increased delivery volumes, achieving economies of scale. As early as July, CJ Logistics will take over Gmarket’s next-day delivery service, ensuring swift delivery within a day of order placement. Additionally, discussions are underway for SSG.COM to sell two logistics centers in Gyeonggi Province, including one in Gimpo, to CJ Logistics.

To address accumulated losses—SSG.COM’s totaling 370 billion won ($270 million) by the end of 2023 and Gmarket’s reaching 95.4 billion won over the past two years—Shinsegae is contemplating securitizing property assets, including E-Mart stores, and divesting stakes in subsidiaries like Shinsegae Food Inc.

In tandem with logistics improvements, E-Mart will collaborate with CJ Cheiljedang Corp. to develop new food products. Last year, E-Mart, SSG.COM, and Gmarket pre-launched 13 new CJ Cheiljedang products two months before their official market release. This initiative exemplifies how Shinsegae’s extensive distribution and sales networks serve as ideal test beds for innovative products. The companies plan to deepen this collaboration from the product planning stage to launch cost-effective items.

The partnership also extends to the media market, though specific details were not disclosed. CJ, as South Korea’s top producer and distributor of films, dramas, and TV shows, presents promising avenues for joint ventures in media content. Moreover, customers of both business groups will be able to earn membership reward points on purchases made at each other’s stores, enhancing customer loyalty and cross-brand engagement.

Shinsegae’s efforts to streamline operations and boost profitability come as the conglomerate seeks a new financial investor to acquire shares in SSG.COM from private equity firms Affinity Equity Partners and BRV Capital. Shinsegae Group, the 11th-largest conglomerate in South Korea, reported sales of 366 trillion won in 2023 through its 53 subsidiaries. CJ Group, ranked 13th, operates 73 units with combined sales of 311 trillion won.

This cooperation agreement marks a significant step in Shinsegae and CJ’s strategy to optimize their operations and market offerings, setting the stage for more efficient, customer-focused services in the competitive e-commerce and logistics landscape.

 

 

Share this on
Jakota Newsletter

Stay ahead in the JAKOTA stock markets with our roundup of vital insights

Icon scroll to top