While many of South Korea's retail sectors including offline stores such as mega-marts and grocery stores received a huge blow due to strict social distancing guidelines issued by the government, Coupang, armed with a variety of quick delivery services, garnered explosive popularity among parents with children and working people who wanted to avoid visiting crowded places. Many grocery products arrive at customers' doorstep early in the morning on the next day they were ordered.
The secret weapon behind Coupang's capability to deliver fresh goods through an overnight delivery system was its fulfillment centers, local area-based logistics centers, equipped with cold-chain facilities, and warehouses where frequently bought items were stored. The cold-chain system allows fresh groceries to stay at the right temperature throughout their delivery phase, ensuring the quality of goods.
Coupang built a fulfillment center that is about the size of 46 football fields in Daegu some 250 kilometers (155 miles) southeast of Seoul in early 2022. The company invested more than 320 billion won to establish a picking and sorting system involving more than one thousand robots.
In conventional fulfillment centers, human workers busily move through aisles to pick up items from the shelves and move to a packaging area before loading the parcels onto a delivery truck. Coupang's autonomous guided vehicle (AGV) robots will pick up items and sorting robots will sort packages by their destinations. Driverless forklifts will lift and carry palettes of heavy cargo of up to one ton to reduce up to 65 percent of operating processes. Some two hundred items can be sorted into boxes in an average of two minutes.
According to Coupang, the automation of picking, sorting, and delivery processes are crucial for its quick delivery services as robots can work even on national holidays and for 24 hours. Robots are thoroughly deployed over the 12-story building (two underground floors and 10 upper floors) to reduce the workload of human workers and maintain the safety level of the work environment.
The fulfillment center in Hwaseong will be remodeled into a robot-based logistics center with some one thousand robots. A total of about one trillion won will be injected in later renewal projects to renovate five existing fulfillment centers into robot-based logistics centers and open four new ones.
During a conference call in 2022, Coupang Chairman Kim Beom-seok picked the automation of logistics systems as the key to the company turning to profit for the first time in eight years. "By integrating the entire logistics process, inventory management is now possible without the need for a separate cold chain delivery network. Coupang reduced inventory loss of fresh food by about 50 percent compared to the previous year with demand forecasting based on machine learning technology."
Coupang continued its profits for two consecutive quarters in two quarters of 2022. According to the US Securities and Exchange Commission (SEC), Coupang's sales in 4Q 2022 increased by 21 percent to 7.24 trillion won on-year and recorded an operating profit of 113.3 billion won.
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