The South Korean Internet giant Naver is reportedly in talks with CJ Logistics to collaborate on a logistics partnership and share acquisition.
Although neither company has confirmed the negotiations, the deal could strengthen both parties in the e-commerce market, especially against their competitor, Coupang.
Coupang, the Korean Amazon, operates the only nationwide fulfillment system in B2C and C2C e-commerce.
On the other hand, Naver has invested in several logistics-based startups this year, indicating the company's strategic interest in the logistics sector.
By partnering with CJ Logistics, Naver could use its extensive nationwide service.
CJ Logistics operates 140 logistics terminals across South Korea, which may be fewer than Coupang's, but the total size of CJ Logistics' facilities is 2.5 times larger.
In addition, the company plans to invest KRW 168.1 billion (USD 148 million) to upgrade its multi-point hubs and sub-terminals by the end of 2021.
Therefore, a partnership with Naver could provide CJ Logistics with a vital partner to fully utilize its increased logistics throughput, which is expected to grow from 6.6 million to 10 million units by next year.
Naver would benefit from CJ Logistics' extensive network and capabilities to compete with Coupang's rocket delivery service.
Currently, 350,000 third-party sellers use Naver's Smart Store platform.
A partnership with CJ Logistics could enable Naver to offer one-day or dawn delivery services similar to Coupang.
In addition, Naver's investments in content and entertainment startups this year also point to a possible collaboration with CJ E & M and Studio Dragon, which are part of the CJ conglomerate.
CJ E&M is the only company in South Korea with a complete entertainment ecosystem, including content and intellectual property.
A partnership between Naver and CJ Logistics could significantly change the South Korean e-commerce market landscape, potentially leading to increased competition and further consolidation.
However, as both companies continue to invest and expand their capabilities, how the negotiations will unfold and the impact the partnership will have on the market remains to be seen.