Hy 'fresh managers' pose threat to Coupang in delivery market

Hy's “fresh managers” in uniform deliver products to customers in Seoul. Courtesy of hy

By Kim Hyun-bin

Hy, formally known as Korea Yakult, is rapidly transforming into a logistics distribution company, evolving as a key competitor to Coupang, the country's largest e-commerce firm specializing in next-day delivery, according to industry officials, Wednesday.

The company's “fresh managers” deliver daily goods such as razors, cosmetics, milk kits and coffee beans through electronic carts, and have exceeded sales of 1 million products in 7 months with its next-day delivery services.

Hy announced that its cumulative delivery volume reached 1 million as of the end of November. It has been seven months since the delivery business started in May.

“The number of products sold has exceeded 1,000. Before, our delivery was centered on fermented milk, but the biggest success factor is expanding to various product categories,” an hy official said. “In addition, we are dealing with fresh foods such as milk kits and salads that have recently been trending, so many customers have been utilizing our services.”

Fredit's delivery service started at the end of 2020 using hy's own logistics network. The company changed its name from Korea Yakult to its current name in March of last year, and started to transition from a food company into a distribution company.

The dairy market growth rate has stagnated at an annual average of 1 percent, and the business model has been reorganized around online and logistics distribution after the COVID-19 outbreak.

Hy's logistics business was carried out as a long-term project. In 2014, hy developed CoCo, a refrigerated electric cart that one can ride, and began expanding its distribution centers. Hy electric carts cost 15 million won ($11,574) each and can operate for more than 10 hours when fully charged.

The items currently offered by the Fredit delivery service range from fresh foods, such as salads and meal kits produced by hy, to items available by subscription, such as razors, functional foods for health, cosmetics, credit cards, diagnostic kits and coffee beans.

The core competency of Fredit's delivery service lies in its approximately 11,000 fresh managers. Through direct communication with customers, prompt responses are achieved compared to other delivery companies, and they cater better to customer requests such as delivery time adjustments and returns.

Refrigerated delivery is another aspect giving hy's logistics service a competitive edge. Since the cold chain system is applied throughout the distribution process, it is possible to deliver products that are difficult to handle and need refrigeration, such as fruit, lunch boxes and salads.

Next-day delivery is also considered a strength of Fredit's delivery service. Orders are usually made through Naver Store, and if a customer places an order in the morning, they can receive the product the next day through the fresh manager. Next-day delivery service is a key competitive advantage that has enabled new distribution platforms such as Coupang and Market Kurly to grow rapidly in a short period of time.