Coupang and LG Household & Health Care Resolve Supply Price Dispute

Negotiations to Resume Transactions Bear Fruit After 1 Year
Direct Transactions Resumed After 4 Years and 9 Months
Coca-Cola and CNP Available for Rocket Delivery

The industry cites the recently expanded anti-Coupang front as the primary reason behind Coupang and LG Household & Health Care's announcement on the 12th to resume direct transactions amid conflicts over delivery prices. Coupang had been responding by increasing the entry of small and medium-sized manufacturers against the 'anti-Coupang alliance' led by large corporations such as CJ CheilJedang, but there were clear limitations. Ultimately, it is analyzed that this reflects Coupang's determination not to lose in the long-term competition.

According to the industry, CJ CheilJedang is considered the vanguard of the anti-Coupang alliance front. At the end of 2022, it stopped supplying major products like Hetbahn to Coupang due to disagreements over delivery prices. Since then, it has expanded the alliance front by joining hands with Shinsegae, Naver, and others to pressure Coupang. Coupang responded by expanding the entry of small and medium-sized manufacturers, but the dominant analysis in the industry was that "Coupang will struggle in the long run."

Coupang delivery vehicles parked in a parking lot in downtown Seoul [Image source=Yonhap News]

With the resumption of this transaction, Coupang now holds LG Household & Health Care's global best products in addition to existing small and medium-sized manufacturers' products. From Coupang's perspective, this means it has further enhanced its competitiveness against the anti-Coupang alliance front. A distribution industry official said, "From Coupang's standpoint, securing various bestsellers has raised the level of response to the 'anti-Coupang coalition' formed by large distributors and manufacturers."

Another background for Coupang resuming transactions with LG Household & Health Care is the rapid growth of Chinese direct purchase companies such as AliExpress and Taemu. In particular, AliExpress is expanding its influence beyond overseas direct purchases into the domestic open market. It is reported that 13 domestic brands, including LG Household & Health Care's Coca-Cola, Cuckoo, and Aekyung Industrial, have recently entered. This year, the establishment of a logistics center has even been announced. In other words, from Coupang's perspective, it needed to trade with LG Household & Health Care to check the growing presence of AliExpress and others in the Korean distribution market.

Because of this background, the industry speculates that "Coupang likely extended the first hand" in resuming direct transactions with LG Household & Health Care. An industry insider said, "It is understood that Coupang began formal negotiations with LG Household & Health Care from the second half of last year," adding, "After months of negotiations, it seems the two companies have joined forces again."

Previously, Coupang and LG Household & Health Care had conflicts during delivery negotiations in April 2019. In this process, LG Household & Health Care reported Coupang to the Fair Trade Commission for violating the Fair Trade Act, alleging unfair trade practices regarding its products. Coupang also stopped transactions, claiming that LG Household & Health Care supplied products to Coupang at prices higher than those sold to other distributors. Due to the depth of this conflict, many in the industry did not expect the resumption of direct transactions.

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