Digital Transformation of Phone Orders
Online Platform 'OrderPlus'
Order Volume Quadrupled in 2 Years
Popular for Comparing Lowest Prices on Products
[Asia Economy Reporter Lim Hye-seon] Kim Jeong-su (45), who opened a snack bar in Songpa-gu, Seoul at the end of last year, orders ingredients through an application (app) instead of by phone. In the early days of his business, he used to call wholesalers introduced by nearby restaurants to place orders, but he faced difficulties due to inconsistent delivery times and fluctuating prices. With ingredient platforms, he can compare prices of various products, and ordering via smartphone ensures delivery by the next morning, making it convenient. Kim said, "Being able to receive ingredients reliably has allowed me to focus more on menu development and customer service."
55 Trillion Won Ingredient Market, Digital Transformation
According to the distribution industry on the 8th, XbX, which operates the online ingredient distribution platform OrderPlus specialized for the food service industry, was selected as a Baby Unicorn after having its business model and growth potential verified by the Ministry of SMEs and Startups.
The size of the domestic ingredient distribution market is estimated at 55 trillion won as of last year. Due to COVID-19 restrictions on business hours, sales of self-employed businesses sharply declined, causing growth in the ingredient market to stall. OrderPlus took this as an opportunity. Interest in reducing ingredient costs among self-employed people increased due to COVID-19, and online platforms that allow safe, contactless ingredient purchases began to attract attention. The number of orders, which averaged 17,000 per month in 2019, has nearly quadrupled this year, surpassing 60,000. The cumulative number of orders has reached 1.5 million. The company expects sales to grow by more than 60% this year.
OrderPlus built the industry's first ingredient distribution platform in 2016. It has a network that allows comparison and ordering of the lowest prices for 139,000 domestic products from large corporations such as Samsung Welstory, CJ Freshway, and Hyundai Green Food, as well as small and medium-sized distribution ingredient merchants. OrderPlus matches a food MD to each restaurant one-on-one, providing ingredient recommendations, cost comparisons, supplier recommendations, and new menu ideas. Features include Good Morning Delivery, which delivers orders by the next morning, and immediate exchanges within three hours if problems arise.
Baemin and Coupang Also Rush In
Baedal Minjok, ranked number one in food delivery apps, recently entered the ingredient market through ‘Baemin Sanghoe’ in 2017. Baemin Sanghoe sold about 400 types of delivery and packaging containers. Recently, it has diversified its products to include bulk ingredients. The number of products sold at Baemin Sanghoe has reached 80,000. Leveraging its accumulated know-how from the delivery market, Baemin Sanghoe is strengthening rapid delivery using Mesh Korea’s infrastructure and Vroong’s refrigerated and frozen trucks.
Coupang operates ‘Coupang Eats Deal,’ a service that supplies food only to registered stores. Coupang Eats recently launched a ‘Family Clearance Sale’ service offering fresh foods nearing expiration at half price to registered stores. GS Retail is launching a distribution specialty mall called ‘GS Biz Club.’ ‘GS Biz Club’ delivers products, including ingredients, to individual business owners such as neighborhood supermarkets. NongHyup is conducting a pilot project for a new distribution model in collaboration with the shared kitchen company ‘Widaehan Sangsa.’
Among existing ingredient companies, CJ Freshway is building a big data platform. CJ Freshway plans to database key information across all business sectors by next year and develop a platform to analyze and utilize this data. The big data platform is created in cooperation with CJ Group’s DT dedicated task force and uses data from all work areas including product planning, sales, and logistics. Customized solutions for customers will also be developed. An order and sales support system will be introduced to propose and sell products online.
A representative from the ingredient distribution industry said, "The domestic food service market size exceeds 200 trillion won, which is more than 10% of Korea’s GDP," adding, "Given the high market growth potential, many companies are eyeing entry into the market."
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