'Ecommerce growth depends on logistics, not new products'

Logistics serves as the backbone of the ecommerce industry. The delivery of online purchases within the same day or two days would not have been possible had there not been efficient logistics processes, which include inventory, packaging items for shipment, and handling returns.

Jin-soo Park, the CEO of South Korean logistics startup Colosseum Corporation, said the gap between those commerce firms with advanced logistics solutions and those without them will continue to widen.

"Innovations in logistics services, rather than new products, are the driving force behind the growth of the global ecommerce industry," Park told The Miilk in a recent interview.

“Legacy fulfillment firms relying only on space and human resources will likely face challenges from new market players focused on advancing logistics solutions and processes,” he added.

The Nasdaq-listed Coupang will be a prime example supporting this point. Coupang has adopted the one-day delivery service by streamlining its logistics process and efficiently managing stocks based on data. Additionally, the company operates an easy return policy through which it accepts most return requests regardless of the conditions. Earning 26.6 trillion won ($20.9 billion) last year, it outraced most of the established retail companies, including Lotte Shopping. In terms of the transaction volume, it also outgunned online commerce businesses, including the web portal giant Naver, in the third quarter last year, recording 32.3 trillion won($25.3 billion).

For legacy logistics firms, the storage and delivery of a relatively small number of items had traditionally been outside the scope of their business operations. Additionally, establishing and running facilities to handle different types of products had been deemed unprofitable, resulting in a lack of such services for commerce companies. However, with the increasing diversity of items sold on online platforms, the need to handle different items, even in small quantities, has grown. Logistics companies also need to directly operate special storage facilities or partner with cold storage companies for items that can be affected by temperature. The growing popularity of international ecommerce services further necessitate the need to establish a presence in global markets.

Park said Colosseum has been striving to meet these needs for ecommerce companies while adopting the latest technologies to improve efficiency.

Despite being a logistics firm, Colosseum does not own a single storage facility. Instead, it acts as an intermediary between storage facility operators and commerce firms nationwide, as well as in other countries, including the US. Colosseum's solutions enable storage facilities to handle a wide range of products in small quantities, and it deploys IT solutions to efficiently manage logistics centers, which are owned by its partners."

Thanks to its efforts to advance its logistics solutions, Colosseum’s revenue has tripled each year since 2020. However, the company has declined to disclose the exact numbers.

“I believe the three-time growth will be achievable this year as we’re trying to diversify our businesses, such as cross-border shipment, and consulting to optimize logistics value chains,” the CEO said.

To further expand its global services, it has been in talks with storage facility operators and ecommerce firms in the US and Southeast Asia, which are considered two of the largest ecommerce destinations.

Achieving the operational stability of its domestic and global logistics processes and upgrading its AI-powered COLO solutions are some of the firm’s priorities, he said.

For instance, the company utilize AI to analyze data collected from the field and make improvements based on the analysis.

“On top of expertise of our employees, the AI technology helps us to find solutions to improving productivity and profits,” the CEO said.

Aiming to revitalizing traditional markets together with local governments, the company also runs a project to operate micro fulfillment centers for small merchants. The rise of the ecommerce platforms has coincided with the decline of traditional markets in recent years. Despite challenges, such as outdated facilities and a shortage of parking space, traditional markets have growth potentials in the business-to-business and food segments, according to Park.

“With the support of advanced logistics solutions, I believe traditional markets will be able to regain their luster,” Park confidently stated.

Colosseum Corporation is an alumnus of The Asan Nanum Foundation's startup support program. The Asan Nanum Foundation is a nonprofit organization established in 2011 to commemorate the 10th anniversary of the passing of Hyundai founder Chung Ju-yung. It operates a series of startup incubation programs in South Korea.