The Impact of Fast Delivery in E-commerce on Brick-and-Mortar retailers: The Case of Coupang's Rocket Delivery in South Korea

The rise of e-commerce has disrupted traditional retail businesses. This study aims to examine the effects of fast delivery in e-commerce on conventional retail sectors, specifically focusing on Coupang in South Korea. The methodology utilized is the difference-in-differences (DiD) model. The selected outcome variables are per capita private consumer expenditure (PCE), the retail sales index (RSI), the number of wholesale and retail businesses (NWR), wholesale and retail employment (WRE), and the consumer price index (CPI). Coupang launched its Rocket Delivery Service (RDS) in 2014 in Daejeon, Daegu, Ulsan, and Seoul, but as of 2024, RDS has not yet been implemented in Gangwon, Jeonnam, or Jeju. Regions served by RDS will be categorized as the treatment group, while those without it will act as the control group. The analysis results from the DiD model reveal that both PCE and RSI were statistically significant at the 10% and 5% levels, respectively. This suggests that regions with RDS experienced increased consumption compared to those without, highlighting the significant impact of rapid e-commerce delivery on private consumption. Conversely, the introduction of RDS showed a negative effect on RSI, indicating that fast e-commerce delivery may negatively influence retail sales. This paradoxical result—rising PCE alongside falling RSI—could be interpreted as another example of the “Amazon effect.” This study will help enhance our understanding of the impact of the innovative of e-commerce service on traditional retail business models and contribute to developing strategies for retailers to respond more effectively to market changes.