Online sales is the latest battlefield for food retailers

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Online sales is the latest battlefield for food retailers

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Top: A CJ Cheiljedang employee introduces food to be sold online; Above: Jibeuro ON’s seafood fried rice. [DAESANG, SHINSEGAE FOOD]

Food companies are shifting to online sales channels, citing improved stock management, lower costs and wider accessibility.

A record 11.8 trillion won ($10.6 billion) of internet transactions in the business were reported in October, further encouraging the shift.

In 2017, Daesang introduced Jibeuro ON, an online-exclusive food brand. There are around 80 products sold under the brand, which includes fried rice, marinated pork and soups. Its sales almost quadrupled in the first year, jumping from 3 billion won in 2017 to 11 billion won in 2018.

“Jibeuro ON was introduced amid the continuous growth of the online market,” said a spokesperson for Daesang. “Jibeuro ON is able to offer more affordable prices by cutting down the distribution network but at the same time is able to maintain the food quality.”

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Milk and Honey’s Castella cake and pound cake. [CJ CHEILJEDANG]

The brand plans to expand product categories to cereals and dosirak, or lunch boxes.

Shinsegae Food is boosting the online sale of desserts.

The company offers pound cakes from its Milk and Honey bakery and frozen cakes from its Vecchia e Nuovo restaurant-bakery brand. Their targets for exclusive foods are millennials and single-person households who seek reasonable prices and convenience.

Bakeries usually do well in offline channel sales, since people make unplanned purchases when it comes to pastries or desserts, but the reduced prices and expanded distribution channels have boosted online bakery sales, according to Shinsegae Food.

The newly established culture of exchanging gifts on birthdays or anniversaries on the KakaoTalk messaging app contributed to raising the sales online, while the trend of enjoying coffee at home has helped, according to Shinsegae Food.

Sales of online bakery products through October grew 26 percent on year. The company increased its product range to 20 from 14 last year.

“Shinsegae Food plans to expand online-exclusive bakery products that used to be only available at specialized bakeries to help customers buy conveniently,” said a spokesperson for the company.

CJ Cheiljedang also highlighted the importance of the online channel.

Last week, the company hosted CJ Unpacked 2019, where merchandisers for the online channel of retailers, such as Naver and Coupang, were introduced to key items scheduled to be launched this month through the first half of next year. Recognizing the importance of the online market, CJ started holding the event last year.

CJ Cheiljedang currently has Cookit, a home meal replacement brand. Launched in April, the pre-cooked meals are exclusively sold online.

CJ Cheiljedang in particular plans to boost the presence of Bibigo brand dumplings and Hetbahn rice online.

“The online market is a crucial market channel that has risen on the ferocious battlefield among food companies,” said a spokesperson for CJ Cheiljedang in charge of online business.

“The company will continue to intensify the online business while leading the industry trend.”

BY JIN MIN-JI [jin.minji@joongang.co.kr]

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