Busan Becomes a Battlefield for Grocery Delivery: Lotte Mart's Logistics Center vs. SSG.com's Store Network

Lotte Mart Focuses Orders on Ocado-Based Automated CFC
SSG.com Launches "Two-Hour Delivery" Using Emart Stores
Large Logistics Center vs. Store Network: A Test of Logistics Efficiency

Busan and the South Gyeongsang Province region are emerging as fierce battlegrounds for online grocery shopping among large retailers. While Lotte Mart has launched an online-exclusive logistics center in Busan, utilizing the UK-based Ocado's automation technology, SSG.com is rolling out a "two-hour delivery" service utilizing existing Emart stores. This sets up a direct logistics strategy showdown, with Lotte concentrating orders at a large-scale logistics center in Busan and Emart leveraging its dense store network.

According to the retail industry on August 15, SSG.com plans to begin two-hour delivery services this month, using Emart stores in the Busan and South Gyeongsang area as hubs. Building on the quick commerce service "Baroquick," which delivers products within about an hour to locations within roughly a 3-kilometer radius, the company is adding a fast delivery service for large-volume grocery shopping as well.

Demand for rapid grocery delivery is also growing in Busan and South Gyeongsang. According to SSG.com, the number of Baroquick orders in this region surged by 221% in the second quarter of this year compared to the previous quarter, outpacing the overall Baroquick order growth rate of 151%.

Exterior view of Zeta Smart Center Busan. Lotte Mart

Lotte Chooses CFC in Busan, While Emart Upgrades Store Networks

The distinction between the two companies is clear in their approach to handling online orders in Busan.

Lotte Mart operates the "Zeta Smart Center Busan" in Gangseo-gu, Busan. This customer fulfillment center (CFC) is the first in Korea to apply the integrated logistics platform (OSP) by British retail tech company Ocado. From inbound and storage to picking, packing, and outbound processing, everything is automated, enabling the center to handle up to 33,000 orders per day and carry as many as 35,000 different products.

Previously, Lotte Mart's online deliveries relied primarily on stores as hubs, but in Busan and the Yeongnam region, the CFC has now become an additional core logistics site. Lotte is not replacing all store-based deliveries nationwide with CFCs at once. Instead, the company is building large-scale automated hubs in high-order-density areas, like Busan, to operate in parallel with its existing store-based delivery network.

At the Busan CFC, customers can choose from up to 13 delivery windows, in two-hour increments, between 8 a.m. and midnight. Dawn delivery is also available. The key strategy is to concentrate orders at the automated facility to boost processing volume, expand product selection, and increase delivery options all at once.

Inside view of Zeta Smart Center Busan AI robot. Provided by Lotte Mart

On the other hand, SSG.com is focusing on maximizing the use of existing Emart stores rather than establishing separate large CFCs. This is a decentralized structure, fulfilling online orders using inventory and personnel located close to the consumer.

Currently in Busan, the company operates daytime "SSG Weekly Delivery" services based on Emart stores and also offers dawn delivery through the CJ Logistics network. By adding the two-hour delivery service, SSG.com is segmenting its offerings into scheduled daytime delivery, dawn delivery, and immediate delivery. The two-hour delivery is available across up to 16 time slots until 8 p.m. Even after the 1:30 p.m. same-day order cut-off for regular daytime delivery, customers can still place same-day grocery orders. The strategy is to capture not only planned bulk shopping needs, but also the last-minute demand for ingredients during the evening.

An SSG.com official is selecting delivery items. Provided by SSG.com

'Automation Efficiency' vs. 'Utilization of Existing Assets'

Ultimately, the competition in Busan centers on whether the processing efficiency of large-scale automation facilities or the effective utilization of existing store networks will prove more competitive in the online grocery market.

Lotte’s CFC can enhance automation benefits as order volume increases. Grocery orders, which require combining fresh, refrigerated, and frozen products, require complex picking and packing processes, making dedicated facilities increasingly advantageous for handling bulk orders. However, given the substantial investment required, securing enough orders to maximize operating rates is critical.

SSG.com's strength lies in reducing investment burdens and delivering close to consumer zones by leveraging its existing stores and inventory. However, if online orders surge rapidly, the capacity of stores tasked with both offline sales and online picking could become a challenge.

SSG.com delivery based on Emart stores. Provided by SSG.com

Busan is considered an ideal testing ground for these logistics strategies. As the largest consumer market outside the Seoul metropolitan area—and with adjacent South Gyeongsang forming a shared living sphere—the region can support a high level of order density.

An industry official commented, "Busan is a market where retailers can assess whether rapid grocery delivery can be commercially viable outside the Seoul metropolitan area. If demand for fast delivery and logistics efficiency are proven in Busan, similar competitive dynamics could spread to other major metropolitan regions such as Daegu, Daejeon, and Gwangju."

This content was produced with the assistance of AI translation services.