[Interview] "Logistics and delivery decide retail's fate"

Kim Woo-sik, Executive Vice President of LogisValley

Kim Woo-sik, Executive Vice President of LogisValley / Photo = Reporter Park Si-hyung

Key figure behind Coupang's 'Rocket Delivery', a 'new challenge' from logistics to same-day delivery

LogisValley becomes the first logistics company to establish last-mile service

[Apparel News Reporter Hae Young Park] LogisValley (CEO Yoon Gun Byung), a specialized logistics enterprise, recently entered the last-mile market through its delivery service 'Fast Delivery'.

Starting with logistics center development and progressing through logistics operation services such as 3PL, it has become the first specialized enterprise to establish everything up to fulfillment (management and agency for the entire logistics process from orders and shipping to returns) and direct delivery services.

While there have often been cases where e-commerce companies built their own logistics and delivery systems directly like Coupang, conversely, there had been no cases where a logistics enterprise expanded all the way into delivery.

LogisValley is a group enterprise created through the participation of specialized companies in the logistics field. Established in 2020 with capital of 10 billion KRW, its annual revenue reaches 1.2 trillion KRW (including affiliates). Developer Sunkyung Development, contractor Sunkyung E&C, Korea's No. 1 logistics equipment provider Bowoo System, operations and delivery entities LogisValley (Cheonma, SLK, etc.), and Hanaro TNS belong to the group.

LogisValley Ansan Logistics Center, which established a state-of-the-art fulfillment logistics base

From planning to investment of Coupang's 'Rocket Delivery'

LogisValley completes fulfillment infrastructure in 6 months

Last year the company recruited Kim Woo-sik, who had been leading Coupang's 'Rocket Delivery', as Vice President of Business Operations.

Regarding the background of choosing to join LogisValley, Vice President Kim says, "'If a seat opens up on a rocket, just get on' is my life motto. In the past, Coupang was the 'rocket,' and now LogisValley is the 'rocket.' The fate of retail is determined by logistics and delivery."

Vice President Kim, who graduated from the Department of Law at Korea University, completed the UCLA MBA program and gained experience in business strategy and M&A at NEMO Partners. After a chance meeting with Coupang CEO Bom Suk Kim, he left the financial industry behind and took the leap to join Coupang.

Vice President Kim is the figure who emphasized the importance of 'Rocket Delivery,' stating that 'logistics is the future of Coupang.' However, he struggled significantly at first. Therefore, he directly secured logistics centers and built delivery networks. At this time, he also formed a relationship with LogisValley CEO Yoon Gun Byung.

Logis's 'Fast Delivery' is a same-day delivery service where if you order when commuting to work, you can receive it when leaving work. The company secured more than 400 1-ton class delivery vehicles, achieving 3 shipments per day and completion from order to receipt within 8 hours.

LogisValley completed a service on par with Coupang's Rocket Delivery, which had 4 trillion KRW invested into it, in about 6 months.

Vice President Kim said, "It was not difficult because we already had optimized facilities, such as Korea's largest logistics base, a dense logistics network, and an internal IT system. An unprecedented logistics delivery infrastructure was completed."

LogisValley Ansan Logistics Center, which established a state-of-the-art fulfillment logistics base

Logistics-to-delivery one-stop service 'Fast Delivery'

Completion from order to delivery within 8 hours

LogisValley secures logistics bases equivalent to the size of 390 soccer fields across the metropolitan area (26 logistics centers in Ansan, Aam, Anseong, Namsa, etc., spanning 700,000 square meters). Starting with Icheon in June next year, it will add 16 locations every year, including Yangju, Incheon, Paju, and Namyangju, securing a total of 41 centers (total area of 2,784,324 square meters). The 70,000-py Ansan Sihwa Logistics Center, equipped with state-of-the-art B2C systems, became a hot topic when it was traded for 420 billion KRW, the highest price in the industry.

Delivery time is shortened by dramatically reducing logistics operation and delivery processes through LogisValley's integrated logistics solution 'Fulfillment by LogisValley (FBL)'.

In addition, Logis possesses internal logistics solution development capabilities. This is also why building from WMS to WCS (Warehouse Control System) and delivery TMS was relatively easy.

Investment continues. In the future, more than 1 trillion KRW will be invested to strengthen logistics networks and IT capabilities. Besides this, smart logistics government projects are also underway. Within just 5 months of launching, it secured clients such as Lotte Home Shopping and CJ O Shopping, which operate affiliate courier companies.

Vice President Kim emphasizes, "'Fast Delivery' provides capabilities that platforms, fashion companies, and distributors all need. For companies struggling with price competition and high return and inventory rates, logistics is a crucial competitive point. As delivery speed becomes faster, order cancellation rates also decrease significantly."

Logis provides customization of logistics delivery considering the situation of each client company. Costs were also set affordably to support companies that face difficulty establishing logistics infrastructure in adopting high-level delivery services.

Vice President Kim says, "Amazon's 'FBA (Fulfillment by Amazon)' is suitable for high-efficiency processing of large volumes, while eBay has high customer satisfaction by customizing packaging materials and packaging methods. Coupang, which has dominance over its sales platform, uses the 'Amazon' method, while LogisValley, which is not involved in sales, can introduce both methods." In the future, the plan is to equip both methods.

LogisValley Logistics Center

Directly employing delivery drivers and improving conditions through systems

"Sharing the opportunity with fashion and retail companies that can't invest in logistics"

The company is also moving quickly on ESG (environmental, social and governance) management. Kim said, "Logistics and delivery are, frankly, quite labor-intensive industries. The physically demanding work of parcel drivers has become a social issue. LogisValley has addressed it through systems, infrastructure and employment practices."

With a regional sorting system in place, delivery drivers are not assigned to sorting work, and its in-house transportation management system (TMS) has cut delivery times.

The TMS, which incorporates delivery time prediction and real-time traffic information, uses automatic routing to cut delivery times by more than 20%.

Delivery drivers are employed directly. Days off and pay have been improved, and delivery volumes reduced to about a third of what a typical driver handles. The natural result has been higher service quality for customers.

LogisValley aims to partner with 100 online stores at home and abroad within two years and deliver 3.5 million shipments a month. By 2025 it expects to have a nationwide delivery network and reach KRW 500 billion in revenue.

Kim said, "We're also entering overseas fulfillment markets. We already have centers in Ho Chi Minh City, Haiphong and Bac Ninh in Vietnam, and we're planning logistics center development and delivery infrastructure at major hubs in Europe. We'll be pursuing a stock market listing before long."