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Coupang stops ordering CJ CheilJedang products

Published: 01 Dec. 2022, 16:01

CJ CheilJedang’s Hetbahn is on sale at a discount mart in Seoul [YONHAP]

CJ CheilJedang’s Hetbahn and Bibigo products could soon disappear from Coupang as the two companies quarrel over supply and price.

Coupang said it stopped ordering CJ CheilJedang’s food products — including Hetbahn, Bibigo dumplings and its kimchi — around early November. The e-commerce company will sell what it has in inventory, but will stop when it runs out.

According to Coupang, the decision follows CJ CheilJedang supplying less product than contracted.

Coupang annually signs contracts with companies to purchase a certain amount of their products at a set price. Despite the contract, CJ CheilJedang supplied around 50 to 60 percent of the amount initially promised.

Coupang says other food companies tend to supply over 90 percent of the amount contracted.

Supplying adequate amounts is important because e-commerce companies reserve space in their warehouses to store products. When companies receive less than expected, the space is left empty, making the logistics process less effective.

CJ CheilJedang said it inevitably had to supply less due to Hetbahn sales increasing a lot this year and it having trouble keeping up with demand. The company claims that it still tried its best, supplying over 50 percent of the contracted amount to Coupang while it supplied around 40 to 50 percent to other channels.

The company says it is the one treated unfairly by Coupang.

According to the food company, Coupang requested CJ CheilJedang to supply products at an unreasonably low price when negotiating prices for next year. CJ CheilJedang turned down the request, with Coupang then announcing it will stop ordering CJ CheilJedang products.

Coupang was involved in a similar dispute in the past.

In 2019, LG Household & Health Care reported Coupang to the Fair Trade Commission for violating the Enforcement Decree of the Monopoly Regulation, claiming Coupang pressured it to supply products at a lower price than other sales channels.

The FTC ruled that Coupang did abuse its market position and force companies to lower prices, fining it 3.3 billion won ($2.5 million).

BY LEE TAE-HEE [[email protected]]