The food industry is restructuring its online distribution channels by shutting down self-operated online malls or consolidating fragmented channels. In the past, companies focused on growing their own online malls to reduce commission costs, but rising fixed costs and intense competition with large platforms have led to a shift towards a more efficient 'selection and concentration' strategy.
According to industry sources, Daesang will terminate its business-to-business (B2B) online grocery mall 'Beston' at noon on August 31. Launched in 2022 as a renewal of the previous 'Zero Food,' the service lasted about four years. Daesang has been expanding its online business, including the introduction of same-day delivery services from its offline grocery stores, 'Bestco.' However, the company decided to end the service to restructure its business for profitability and strengthen its core competitiveness. Ten offline Bestco stores located in Goyang, Gangneung, Wonju, Cheongju, and Daejeon will continue operations.
CJ Freshway will also close its online grocery mall 'Freshen' at 2 p.m. on September 29. Instead, the company will consolidate its online B2B capabilities into 'Sikbom,' a grocery open market platform acquired in February. Unlike Freshen, which focuses on private brand products, Sikbom is an open market with various sellers. It has accumulated 250,000 purchasing customers, representing one in four small business owners in the domestic food service industry. CJ Freshway plans to integrate its sourcing capabilities and cold chain logistics with Sikbom's customer base and platform infrastructure.
Similar trends are occurring in business-to-consumer (B2C) distribution channels. Namyang Dairy Products ended operations of its direct online mall 'Namyang Mall' in June and shifted its sales channel to Naver's brand store. After merging its previous parenting site 'Namyang I Mall' into 'Namyang Mall' last year, the company is now gradually phasing out its own online channels. Dongwon F&B also consolidated its separately operated 'Dongwon Mall' and 'The Banchan' at the end of last year to focus its online capabilities in one place.
The primary reason food companies are reducing or closing their own malls is the ongoing burden of fixed costs. While self-operated malls can secure profitability by reducing distribution steps and attracting loyal customers through subscription services, the marketing costs to attract new customers, along with logistics, customer service, and system maintenance expenses, can be significant. This is especially true for grocery malls, which require cold chain management for fresh products and inventory and price management for various items. If sufficient transaction volume is not achieved, the costs of operating a self-mall can outweigh the benefits of reduced commissions.
Additionally, the dominance of large e-commerce platforms like Coupang and Naver, which offer same-day and next-day delivery, has further limited the viability of operating self-malls.
An industry insider stated, "In the past, having a self-operated online mall was seen as significant, but now actual profitability and operational efficiency have become more important. Companies are restructuring their online businesses by utilizing large platforms or integrating multiple channels rather than operating all channels directly."
* This article has been translated by AI.
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