South Korea’s retail giants Shinsegae Group and CJ Group have agreed to cooperate on logistics and retail businesses to compete with domestic and overseas rivals.

The two retail giants signed a memorandum of understanding Wednesday for their partnership centering on the Shinsegae Group e-commerce platform’s utilization of CJ Group’s nationwide logistics network.

According to their announcement, CJ Logistics will be in charge of deliveries of goods sold on Shinsegae Group’s e-commerce unit Gmarket. Shinsegae expects the partnership will offer a wider time frame for the placement of next-day shipping orders than Gmarket’s current delivery system.

Gmarket currently uses its own Smile Delivery service, in which customers should place orders before 8 p.m. for next-day shipping. But, when CJ Logistics handles Gmarket’s deliveries, customers will have four more hours to place their orders for next-day delivery, Shinsegae explained.

CJ Logistics will also manage the overall distribution system of Shinsegae's online shopping platform SSG.com, including its two logistics centers in Gimpo and Gwangju in Gyeonggi Province.

The two groups added that they will discuss options to sell the logistics centers to CJ Logistics.

By having CJ Group handle its logistics, SSG.com will be able to save on delivery costs, Shinsegae Group expected. SSG.com will also be able to focus more on its grocery business, together with the group’s discount chain E-mart, to compete in the grocery delivery market here.

In Korea, Coupang is currently leading the market for early morning grocery deliveries, followed by Market Kurly in second and SSG.com in third.

Shinsegae Group added it could also have CJ Logistics handle E-mart’s business-to-business logistics, including the discount chain’s purchase of goods.

CJ Group, on the other hand, expects a significant increase in the company’s logistics volume. CJ Logistics will use this partnership as an opportunity to step up as the country's leading third-party logistics company, it said.

CJ CheilJedang, the Korean food giant under CJ Group, will also start to cooperate with Emart to develop more affordable food products. When they co-develop new food items, Gmarket and Emart are expected to have exclusive rights to sell them before they get introduced to other shopping platforms.

In August last year, Gmarket and Emart introduced 13 food items from CJ CheilJedang brands Bibigo and Hetbahn before they reached other platforms.

Shinsegae and CJ Group are also considering a merger of their membership benefit programs to add synergy to their partnership.

Shinsegae Group currently operates Shinsegae Universe Club, a paid membership program that allows customers to gain rewards through purchasing goods at the group's retail businesses, including its department stores, Emart, SSG.com, Gmarket, Shinsegae Duty Free and Starbucks.

CJ Group has its membership program, dubbed CJ One program, which is available at the multiplex cinema chain CJ CGV and beauty product retail chain Olive Young.