Market Kurly fills niche for foodies
Kim happily spent an entire weekend hopping from one market to another in her quest for the best ingredients. Fresh mussels came from one market, organic cabbage from another.
But her quest was anything but simple. Wholesalers didn’t sell products in small quantities, and she had to watch as a one kilogram (2.2 pound) batch of kale rotted in her refrigerator. Kim decided to make a grocery shopping platform for people with her passion for food. Three years later, Market Kurly has become one of the most celebrated start-ups in the country with revenues of more than nine billion won ($8.37 million) per month and 500,000 subscribers.
Kim says strict quality control for every item offered is the real key to the business.
“Quality and safety control is one standard that I will not overlook while doing this business,” she said in an interview with the Korea JoongAng Daily.
“By applying ever stricter standards, I want to sort of enlighten the customers and elevate their standards as well,” she added.
Market Kurly expanded its product range from groceries to some items that consumers are worried about in terms of safety: diapers, sanitary pads and some household products.
“This was actually requested by our customers last year,” Kim said. “They asked us to bring our standard of safety to these types of products. We added a number of items to the list last year and thanks to the positive response, we are planning to expand it more.”
Below are edited excerpts of the interview.
Q. Can you describe how you started the business in the first place?
A. It started 100 percent from my passion for food. I guess it was a selfish motivation at first. I found that a lot of my colleagues shared the same passion and also shared the same inconvenience of having to move from store to store to get the products we wanted. I concluded that a lot of my generation and people even younger wanted a food shopping experience that was not offered from existing retail platforms.
What was the first item you offered on the Market Kurly platform?
It was 12 select vegetable for ssam (vegetable to wrap fillings). I believe there isn’t much difference in the flavor of meat as long as it is fresh. But vegetables offer another level of culinary experience if they are raised organically. It was a naive thought, come to think of it now, because fresh vegetables is one of the most difficult categories to retail. They get damaged easily if the environment is a bit dry or a bit cold or a bit hot.
Market Kurly provides some distinctive choices that are hard to find on offline channels like mat ganjang (soy sauce flavored with diverse ingredients) and mint jelly for lamb chops. How do you source these products?
I was a regular customer of those products before starting this business. There were a lot of housewives who were extremely talented in inventing secret recipes or ingredients and they were sharing a small quantity of such items with their neighbors and later through online blogs. I personally benefitted a lot from those platforms. Mat ganjang, for example, is a very time-consuming thing to make, but with a couple of drops, every soup or boiled dish becomes extremely delicious. I wanted to allow our customers to taste that without having to spend their entire day standing in front of the stove.
Do you have a special team dedicated to curating items for the platform?
Yes we have a team dedicated to curating products comprised of 12 people. Basically, most of the people on our team are foodies. They are well aware of the ongoing culinary trends and have a passion for trying out new things. They write reports about items they find and bring them to me. I act as a gatekeeper before selling the products to the customers.
What are your standards in approving products?
I believe I am still the most customer-conscious person in my company. I do 100 percent of my grocery shopping through Market Kurly, so even if certain product and pricing seems tempting to me as the CEO, the consumer in me may say it shouldn’t be offered on the platform or shouldn’t be offerered at too high a price. For example, if there are products that people buy frequently that have high price tags, I find a way to lower the price. If I was a purely business-minded person, I wouldn’t think about that because the margin would be good.
Market Kurly has a reputation for offering unique and premium products. But demand for such unique items is limited and the business will have to make a profit. How do you keep a balance between offering rare or premium grocery item and concentrating on the bottom line?
We try to offer products consumed on daily basis at a reasonable price. But there are products that cannot depend on economies of scale. Fresh vegetables, for example, cannot be mass produced without quality being sacrificed. As a result, I try to source from multiple small wholesalers so I can rotate the suppliers if the demand is high. Eggs sold on our platform, for example, are not the kind of mass produced eggs that discount chains rely on. So during the avian influenza crisis, the egg products sold on our platform were instantly sold out. People called on the company to increase the supply, but I couldn’t risk the quality of the eggs to make more money. That just wasn’t our policy. And thanks to such a policy, the eggs sold on Market Kurly were safe from the influenza crisis.
What is the core technology for the platform?
Among others, logistic technology used for expecting demand, controlling inventory and tracking products being delivered is vital in reducing our costs. The data we have to process is huge. There are some 3,000 items on the platform. It is important to process such data fast and precisely.
Do you use a logistics system that you developed in-house?
We didn’t make the initial concept of it. The algorithm model used for forecasting demand is an age-old one but what’s critical is to extract meaningful data from it. Before our algorithm was upgraded, we over-predicted the demand for lettuce. So we had to bring the remaining lettuce to the office and just consumed it by ourselves. It is important to reflect our daily process in the algorithm to get more precise and meaningful data. For example, lettuce and samgyeopsal (pork belly) have high correlation to each other. When one of the items’ demand rises, we restock the correlated item as well. When the demand for duck is high, we reduce the stock for lettuce because duck and samgyeopsal substitute for each other. When the demand for duck is high, demand for chives goes up accordingly.
Can you help shape demand?
Yes. A lot of our customers consume the products not simply as food but also as part of a lifestyle. So when we post a picture of steamed duck decorated with slices of sweet pumpkin on top, the demand for sweet pumpkin goes up. If we style Spanish mackerel as being cooked en papillote with slices of lemon and lime, demand for citrus fruits go up.
Sales of products from the popular bakery May’s Bell in Itaewon were suspended due to food hygiene. What happened?
According to Korea’s regulation, a food company or a restaurant has to go through a separate hygiene approval process applied to food manufacturing companies in order for its products to be sold through a different retail platform like us. May’s Bell’s bread was popular on Market Kurly but it wasn’t possible for such a small bakery to build a separate ingredient storage room, baking room and packaging room, which are required for the hygiene approval process. So we suspended sales of their products. Such equipment is only possible for conglomerates. We had to let go of so many gems due to this regulation.
You recently launched a third-party logistics service where you provide overnight delivery solutions for small online-to-offline business. Why?
Even if one overcomes all the hurdles to start a food business, delivery from manufacturers to customers plays a critical role in its success. Online-to-offline service is mandatory these days, but a logistics system will cost a fortune considering the building of a logistics center and hiring workers. If you use a delivery company, it won’t care about the quality of your fresh ingredients. So in order to help those small businesses, we decided to lend our logistics system.
Is there a way to deal with that regulation?
We are collaborating with another start-up called OTD to establish a facility with diverse manufacturing equipment that these small eateries can share. It is impossible for them to spend billions of won to build manufacturing facilities so we are making accessible a facility that can be shared to get past the regulation.
Fresh food delivery service is booming in Korea with big companies like GS and CJ jumping on the bandwagon. How do you plan to compete?
I believe the industry still has a lot of room to grow. I think it is positive that more players come into the industry because they will accelerate the expansion of the industry. We can survive through our unique strengths. We are not going to forget why customers liked Market Kurly in the first place.
BY JIN EUN-SOO [firstname.lastname@example.org]
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