[Opinion] Digital Pivoting Strategy of Analog Door-to-Door Sales

Kim Kyung-jun, Vice Chairman of Deloitte Consulting

Politically, it is said that "reform is harder than revolution." Revolution, which denies the existing system and establishes a new order, is likened to drawing a picture on a blank sheet of paper. However, reform, which forms a new order based on the existing structure, is more difficult because it is like repainting an already drawn picture. The common belief that starting a business is harder than maintaining one in a company is similar. Starting a business is not easy, but at least there is no internal resistance. On the other hand, maintaining and expanding an existing business must overcome internal opposition first. This is because, from each member's perspective, the expected future benefits from change are ambiguous, while the current losses to be borne are clear.

The same situation applies to analog companies in the era of digital transformation. Since the concepts and directions of digital transformation understood by members vary widely, their positions are diverse. The organizational culture that drove success in the analog era can become an inert fossil lagging behind in the digital era, becoming an obstacle to future-oriented change. The key to success for analog companies that overcome these obstacles and achieve results in digital transformation lies in "digital pivoting," which reinterprets the "essence of the business" and integrates digital technology. Pivoting refers to a basketball move where a player holding the ball keeps one foot stationary while moving the other to change direction, and recently, it has been used to describe startups' shifts in business direction.

Door-to-door sales, where sales activities are conducted by visiting each household, is a typical analog distribution method. Starting from the peddlers (haengsang) of the Joseon Dynasty, various daily necessities such as cosmetics, food, beverages, and books were sold door-to-door in residential areas in the past. Door-to-door sales, which had been relatively stable, took a direct hit from digital trends. The emergence of online shopping reduced the convenience of door-to-door sales, and the younger generation does not prefer face-to-face contact itself. Door-to-door sales, which were the core competency in offline distribution structures, have become a high-cost, low-efficiency channel due to environmental changes.

Korea Yakult is exemplary in achieving remarkable results in business model innovation by integrating digital technology while maintaining the basic structure of door-to-door sales. Korea Yakult grew based on a door-to-door sales organization composed of so-called "Yakult ajummas." With the emergence of new distribution formats such as discount stores and convenience stores and the spread of online sales, the existing sales method reached its limits. The response strategy was digital pivoting, which maintains the "essence of the business" but changes the way value is created and delivered. It started by combining the analog door-to-door sales method with digital technology. The hand-pulled carts were replaced with refrigerated electric carts to improve mobility. A smartphone app was used as a medium to connect salespeople and consumers, enhancing the convenience of ordering and delivery. Early in the app's launch, the process of finding nearby "Yakult ajummas" among the MZ generation attracted attention like a game reminiscent of "Pok?mon Go," where players find virtual characters nearby. The product lineup expanded from fermented milk to include coffee and recently meal kits. Eventually, the company even changed its name to hy, completely transforming its identity.

If analog companies remain as they are, their survival itself becomes uncertain. Technologies based on analog methods rapidly become obsolete, and offline markets shrink. A perspective of digital pivoting, which reinterprets and reestablishes existing businesses from a digital viewpoint, is necessary. In an environment where change accelerates, analog companies need a calm, strategic direction to reflect on and reinterpret the "essence of the business" and integrate digital technology.

[Kim Kyung-jun, Vice Chairman, Deloitte Consulting]