hankyoreh

Market Kurly’s CEO Sophie Kim at her office in Seoul with some of the food items the website sells

Since it was launched last year, Market Kurly, a website selling food products, has been grabbing the attention of gastronomes as well as ordinary customers looking for food they can trust.

One look at the array of items for sale is enough to show what culinary connoisseurs are so excited about. The website has a panoply of products that you could not find in the food section of the finest department store.

There is bread from La Montee, a traditional French bakery in the Gwangjin district of Seoul and from Maybell Bakery, which uses natural yeast and where bread sells out while customers are still waiting in line to buy it. There is cured Hanwoo, or Korean beef, from Born and Bred, a butcher’s shop that is the pride and joy of Seoul’s meat district in Majang neighborhood. And there are steaks made with pork from the only Berkshire pigs raised in Korea, on the slopes of Jiri Mountain.

As long as you place your order by 11 pm, the food will be dropped off at your door by 7 the next morning (in Seoul and Gyeonggi Province, at least). It‘s enough to make one feel like a kid waiting for Santa Claus to bring his presents.

By this point in the article, readers are probably picturing this as a website for gourmands living in the lap of luxury. But epicureanism hardly scratches the surface of what Market Kurly represents.

When the Hankyoreh met Market Kurly CEO Sophie Kim at her office in Seoul last week, she shared her goal of transforming the distribution system for organic and eco-friendly food in South Korea. That is a lofty ambition for a start-up that has been in business for less than a year.

After completing her studies in the US, Kim worked at a number of global consulting and investment firms in Hong Kong and Singapore before returning to South Korea in 2014.

“Obviously, Hong Kong and Singapore are gastronomic paradises,” Kim said. “I went out to eat all the time. I did my consulting and investment work in the area of distribution as well.”

“Once I was back in Korea, I realized how expensive and inconvenient it was to buy fine food. I figured there must be some kind of structural problem. What my analysis showed was that South Korea has a bizarre distribution system for fresh food. Producers aren’t making any money, and it’s expensive for customers to eat out. Most of the profit is being captured by the distributors.”

“The situation is even worse for eco-friendly and organic crops. I think that the distribution system needs to be changed so that farmers can make more and consumers can eat for less.”

Most eco-friendly and organic outlets at department stores and large supermarkets are rented out. This means that all the retailers do is take a cut from sales while providing little if any marketing.

This puts the entire burden of keeping groceries in stock on the farmers, even though the supply of eco-friendly and organic food depends on the weather. Since there is so much risk, farmers have to set prices high. And since prices are high, demand does not increase. It’s a vicious cycle.

In order to flip this vicious cycle, Market Kurly deals directly with producers for all of its products, buying all its products directly. It preorders from producers to lock down supply in advance. This means that Market Kurly is completely responsible for inventory.

“The idea is that, since we’re taking on all the risk, farmers can focus on the farming. We think this is a way to lower prices and enable customers to purchase organic and eco-friendly produce for a price that’s just slightly higher than non-organic produce. I think that the only way for organic and eco-friendly farmers to survive is to increase demand by taking a high volume, low margin approach,” Kim said.

Since Market Kurly has shouldered the risk of keeping product in stock, it has to be particularly good at selling it.

The company packages its products with more pizzazz than you would expect from a department store. In the studio at the company’s office, a food stylist and photographer take mouthwatering shots of foods like spicy peppers, daisy greens and cucumbers that sell for a few bucks.

What is even more important, though, is reading consumers’ minds and keeping on top of inventory. “Our core competency is predicting consumer demand and managing our inventory, based on our analysis of big data,” Kim said. “You could say that our company identity is half distribution and half IT.”

When the fledgling firm approached farmers, offering to purchase their products directly, most farmers were skeptical. So buyers paid repeat visits to the farms, earning farmers‘ trust by picking apples with them, doing some cleaning for them and helping their school-age kids with their English homework.

But what really won the farmers over was the brand marketing that Market Kurly provided them. For most produce that it sells, the company offers an elaborate explanation of the farmer that grew it, the environment in which it was grown, and the methods that were used.

“People who have made a name for themselves as organic and eco-friendly farmers have fierce pride in their work and have their own well-defined philosophy. There’s no other distributor that puts these farmers’ brands at the forefront the way we do,” Kim said.

Market Kurly’s respect for producers was also what enabled it to bring on board May Bell and La Montee, both of which had rejected proposals from numerous department stores to open branches there.

Unlike most distributors, which promote competition by dealing with a large number of producers, Market Kurly only has one producer per product. This means that each producer is supplying a similar product volume to Market Kurly as it does to the big box stores. This is how the company keeps its prices competitive: by leveraging economies of scale.

“Buyers from other distributors spend a lot of time finding new products and new producers. But our buyers spend most of their time meeting their current producers,” Kim explained.

Milk provides a prime example of how Market Kurly chooses which products to sell. From the time the site opened a year ago, the company began researching milk.

It took quite some time for the company to set its standards for what kind of milk to sell. While it finally decided to sell milk from cows that grazed on grass all year round, there was no milk in the country that satisfied those conditions. There were organic ranches that fed cows grass in the summer, but even these fed the cows imported hay in the winter, when there isn’t much on the ground.

After scouring South Korea, the company found the ranch with the most pastureland in the country on Jeju Island, a part of the country that stays warm even during the winter. The rancher had shut down his operation a few years before because of plunging milk prices, but he was reluctantly persuaded to start milking cows again. This is the ranch whose milk the company is planning to sell.

Given the way Market Kurly selects its products, it doesn’t sell more than three kinds of products in any given category.

“If you go to a department store, they have dozens of kinds of olive oil on display, right? What are customers supposed to do with that? Retailers ought to sell products that they think are really good. The distribution margin shouldn’t be some kind of rent that is paid to the middleman. The margin ought to reflect the value you’re creating, value that even your customers would acknowledge,” Kim said.

When Market Kurly opened for business in May of last year, it was making 100 million won (US$85,800) a month selling 70 products. One year later, it has 1,300 products for sale, and its monthly revenue has topped 2 billion won. The company’s goal is to reach 10 billion won in monthly revenue before the end of the year.

By Yoo Shin-jae, staff reporter

Please direct questions or comments to [english@hani.co.kr]