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| CJ CheilJedang's kimchi products are displayed on shelves at a large retail store in Seoul, Sept. 18, 2022. Yonhap |
By Kim Jae-heun
Local food companies are moving to strengthen their own online shopping malls to increase bargaining power against Coupang, Shinsegae, Lotte and other retailers as both sides have been engaged in a dispute over supply prices, according to industry officials Friday.
In December, Coupang decided to halt its sales of CJ CheilJedang's popular Hetbahn instant rice and Bibigo's dumplings and kimchi on its platform as they failed to agree upon pricing. CJ CheilJedang wanted to enlarge profits by increasing the unit prices of its products sold to Coupang. But the e-commerce firm wanted to lower the prices to maximize its retail margins. The two companies are still unable to resolve their differences.
Earlier this year, Lotte Mart, a retail store chain operated by Lotte Shopping, stopped selling products from CJ CheilJedang, Pulmuone and Daesang temporarily after they failed to agree on supply prices.
In 2010, Nonghim and CJ CheilJedang were at odds with large retail stores over the prices of their products. LG Household & Health Care also argued with Coupang over the margin rate in 2019.
Amidst these escalating conflicts with retailers, food firms have decided to strengthen their own retail channels to increase margins and deal with consumers directly.
Last August, Nongshim opened its own online shopping mall. Since then it has been launching new products there and providing various promotional benefits to its customers directly.
"We have launched our online shopping mall to communicate directly with our customers and provide distinguished services on our platform exclusively," a Nongshim official said.
Ottogi is working on reorganizing its shopping platform to boost its online sales too. Lotte Chilsung Beverage, Dongwon Dear Food and Our Home are also offering various discount promotions for online customers.
CJ CheilJedang said it has been strengthening its online retail channels for a long time now, and that it had nothing to do with increasing its bargaining power against e-commerce firms.
"Our conflict with Coupang is just friction aroused from the negotiations and we will do our best to resolve the issue based on our trust with Coupang," a CJ CheilJedang official said.
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