South Korea’s food companies ramp up online direct sales

CJ Cheiljedang and Hy saw a sales surge from their direct sales initiatives.

South Korea’s major food companies have been expanding their direct sales through their own online shopping portals, instead of using large discount stores or e-commerce platforms, Korea Bizwire reported.

Processed food maker, CJ Cheiljedang, has been engaged in aggressive marketing, greatly expanding the scope of discount events since it upgraded its online mall CJ On Mart to CJ The Market in July 2019.

Through this, the company saw membership at its online mall mark an almost threefold surge from 700,000 in August 2019 to 2 million in July 2020. Sales also registered a robust year-on-year growth of 34% during the first five months of 2021.

Hy, formerly known as Korea Yakult, upgraded its online mall Hy Fresh into Fredit, which sells not only Hy products but also other eco-friendly daily necessities and organic health food from other companies.

Fredit saw its registered members jump in number from 380,000 in 2019 to 680,000 in 2020, with the number of online orders rising from 980,000 to 1.5 million during the same period.

This trend was attributed to a rise in consumer demand for online purchases since the outbreak of the coronavirus. Furthermore, their profits also can grow since they no longer need to pay fees to other distribution channels.

“By selling products directly through their own malls, food companies can also acquire a variety of information on their customers and such information can be used for product development and marketing,” an industry official said.