"Sodomall Sells at Up to 70% Below Online Lowest Prices"... Growth Fueled by Word of Mouth [NE Coffee Chat]

Reducing Inventory and Lowering Prices Through Group Buying Structure
Word-of-Mouth Driven, Community-Based Store Expansion Strategy
Focusing on Strengthening Fundamentals Beyond Rapid External Growth

With the recent surge in grocery prices, consumers are scrutinizing price tags more carefully than ever to save every penny. As a result, large retail corporations and online shopping malls, which have secured price competitiveness through economies of scale and reduced fixed costs, are gaining even more prominence, while small offline stores are closing down one after another. However, there is a small and medium-sized retail company that is bucking this trend and competing head-on with "price competitiveness": Sodomall. True to its name, which is derived from the company's slogan "Consumers also at wholesale prices," Sodomall is committed to offering the lowest prices. After opening its first store in Dongjak-gu, Seoul in July last year, Sodomall achieved annual sales of 11.2 billion won and an operating profit of 800 million won within just six months, and opened 160 stores nationwide within a year.

On June 26, Deokho Seo, CEO of Sodomall, said, "From the beginning, we designed the business model to be profitable," adding, "We operate with almost no inventory by using a group-buying system." Sodomall's headquarters selects products and offers them for group purchase through KakaoTalk open chat rooms for each store. Customers reserve only the quantities they want and pick them up directly at the store.

Deokho Seo, CEO of Sodomall and Road FC. Sodomall

Group purchases are limited to three to five items per day, and by reducing intermediate distribution steps, Sodomall has lowered unit costs. As a result, manufacturers can reduce production burdens through confirmed orders and quick settlements, while customers can purchase products up to 70% cheaper than the lowest online prices. Stores only bring in the quantities they need, which reduces their operational burden, and store owners can expect stable profits. Seo explained, "We aim for a win-win structure that benefits manufacturers, customers, and store owners alike."

Sodomall recently signed additional contracts with 450 stores, continuing its rapid expansion even without separate advertising. Seo said, "We don't do any marketing. It's all word of mouth." This word-of-mouth effect is driven by both the store entry strategy and the characteristics of the customer base. Seo explained, "Rather than busy areas like Myeong-dong or Gangnam, we prioritize residential areas where people live." Currently, Sodomall stores are concentrated in residential communities with active local networks, such as new towns or apartment complexes.

The main customer base also fits well with this structure. The active information sharing among housewives in their 40s and 50s through local communities, and the steady demand from one- or two-person households who value practical spending, naturally drive the spread of word of mouth. While most stores are currently in the Seoul metropolitan area, Sodomall has recently opened locations in Gangneung and Wonju as well.

Sodomall's next challenge is to "strengthen its foundation." Seo said, "Having focused on external growth so far, we will now work on improving our sourcing capabilities and systematizing store owner training." To this end, the company plans to hold both quarterly and ad hoc meetings with store owners. In line with the principle that "wholesale or lowest prices do not mean sacrificing quality," Sodomall is also strengthening standards to ensure the stable supply of higher-quality products.

Seo currently also serves as CEO of the mixed martial arts organization Road FC. He said, "Thanks to the advice of Sodomall's board, who have decades of experience in the distribution industry, and the support of colleagues like Jung Moonhong, chairman of Road FC, I have been able to focus on running Sodomall." He added, "I will continue to support the sustainable growth of store owners who trust and work with Sodomall, and always strive to help customers who are weary from high prices."