Korean e-Commerce company Coupang was again embroiled in the controversy on its rocket delivery - a direct delivery service by its own employees and vehicles rather than delivery contractors within 24 hours.
It was found out that when consumers change their minds and return their products for the rocket delivery, they have to pay 5,000 won. This is illegal under the transportation law which prohibits companies from charging fees using a company's own vehicles.
Multiple local media outlets reported on Thursday citing an official of The Ministry of Transportation that "When the company uses its own vehicles for the delivery of returning goods, there is room for illegitimacy. Under the current act, companies cannot deliver goods at a cost when they use their own vehicles."
In regards with this, Coupang refuted the claim, saying, "The 5,000 won is deducted for fees for box, wrapping and employees." Currently, when consumers order products online, they normally charge around 2,500 won for delivery. Among them, companies give around 1,900 won to delivery companies. Considering the general delivery fees, the 5,000 won is quite expensive, according to industry observers.
"Wrapping price including box costs less than 1,000 won. It is too much to charge 5,000 won for return delivery," said one entrepreneur running a shopping mall, declining to be identified.
The Ministry of Transportation said though it needs site investigation, the ministry is not able to block the behavior as it should be sent to the prosecution. If the incident turned out to be illegal, the company should pay less than 20 million won for fine, market watchers said.
This is not the first time the company is embroiled in the controversy for its rocket delivery. Since last year, the Korea Integrated Logistics Association has continued to file a lawsuit against the company, saying that the firm's rocket delivery is illegal.
Earlier, the Ministry of Transpiration said Coupang's receiving 2,500 won for delivery cost for products less than 9,800 won is illegal. Since then, Coupang has been providing free rocket delivery for products more than 9,800 won.
At the time, the ministry saw that charging delivery fee to customers buying products is against the transportation law as Coupang's trucks for rocket delivery is its own vehicles (white license plate) not trucks for sales.
As Coupang stopped the paid rocket delivery, the controversies seemed to fade down but this has been at the heart of the debate again with the return charge.
Last March, the Ministry of Transportation said that "When Coupang charges delivery fee to customers buying goods via rocket delivery, there is room for controversy on its illegality. But in the case of free delivery, we should consider whether the product cost includes the delivery fee."
Coupang’s started its “rocket delivery” last year. Instead of signing contracts with delivery companies, they hired 1,000 “Coupang men” to deliver goods with an investment of 150 billion won. After adopting the service, the delivery time has been much shortened and they plan to hire additional 800 Coupang men by next month.
Softbank, a Japanese Internet corporation, which invested $1 billion in Coupang, has paid attention to Coupang’s nationwide distribution system and its technical competitiveness through research and development centers in Silicon Valley, Shanghai and Seattle.
Market watchers say when the investment is completed, the value of Coupang will reach 5.5 trillion won and Softbank will grab a 20 percent stake.
Coupang CEO and founder Kim Beom-seok said he is happy to attract an investment from Softbank known for a long-term investor.