Shinsegae Group and CJ Group sign an MOU on business cooperation on June 5, 2024
Retail-focused Shinsegae Group will outsource delivery services and logistics management for its e-commerce platforms such as SSG.COM and Gmarket Inc. to CJ Logistics Corp., South Korea’s No. 1 logistics company, in a business cooperation with food-to-entertainment conglomerate CJ.
On Wednesday, executives from Shinsegae’s supermarket chain E-Mart Inc. and Shinsegae Property Co., a shopping mall operator, signed a memorandum of understanding (MOU) with their counterparts from CJ Logistics and CJ CGV Co., a multiplex cinema chain, on their business tie-ups.
Their cooperation will be focused on logistics, food and media.
The preliminary agreement is expected to help SSG.COM, Gmarket and E-Mart cut delivery costs and focus on sales marketing in fierce competition with cheap-price online malls amid the fast grocery delivery service boom.
CJ Logistics will likely achieve the economies of scale from the business partnership that would significantly increase its delivery volume.
As early as July, the logistics firm will start to take charge of next-day delivery services for Gmarket, which guarantee a product delivery a day after an order is placed.
SSG.COM’s fulfillment center
SSG.COM is in talks to sell its two logistics centers in Gyeonggi Province, including one in Gimpo bordering Seoul to CJ Logistics.
Shinsegae is considering securitizing some property assets, including E-Mart’s stores and selling stakes in subsidiaries including Shinsegae Food Inc. to reduce losses from SSG.COM and Gmarket, according to investment banking sources.
SSG.COM is mired in accumulated losses amounting to 370 billion won ($270 million) as of the end of 2023. GMarket posted cumulative losses of a 95.4 billion won in the past two years.
In 2023, E-Mart posted its first-ever annual loss of 46.9 billion won.
FOOD DEVELOPMENT
Under the MOU, E-Mart will develop food products jointly with food company CJ Cheiljedang Corp.
In August last year, E-Mart, SSG.COM and Gmarket pre-launched 13 types of CJ Cheiljedang’s new food products two months before they hit the market.
A selection of CJ Cheiljedang’s food products
“Shinsegae’s distribution and sales network both online and offline is the optimal test bed for our new products,” said a CJ official.
“In the future, the two companies will go further than pre-launching new products and collaborate from the product planning stage to release cost-effective products,” he added.
MEDIA
Shinsegae and CJ groups will also explore collaboration in the media market, for which they did not give details. CJ is South Korea’s No. 1 producer and distributor of movies, drama series and TV shows.
The two business groups will allow their customers to earn membership reward points, even when making purchases at the other party’s stores.
Their tentative cooperation comes as Shinsegae Group is endeavoring to find a new financial investor to buy shares in SSG.COM from two private equity firms Affinity Equity Partners and BRV Capital.
Shinsegae is South Korea’s 11th-largest conglomerate with 53 subsidiaries, which together generated sales of 366 trillion won in 2023. CJ Group, ranked 13th, manages 73 units with a combined sales of 311 trillion won.
By Hun-Hyoung Ha
hhh@hankyung.com
Yeonhee Kim edited this article
