CU in China: Why South Korean retail giant is adopting ‘online first’ strategy
Even though China’s convenience store market is crowded with Chinese rivals and foreign peers like 7-Eleven, it remains far from saturated
South Korean convenience store giant CU has been testing the waters in China with a limited online trial operation, marking a different approach from other multinational brands that bet big on physical outlets.
The brand, operated by BGF Retail which has around 18,600 stores in South Korea, is being cautious to start with. Together with its Chinese partner Ningshing Ubay, it is only selling 11 products on e-commerce platform Tmall under Alibaba Group, which also owns the South China Morning Post.
Analysts said the “online-first, private-label-driven” business model was meant to avoid head-on confrontation with rivals in China’s highly competitive e-commerce market but also guarantee access to the world’s second-largest consumer market.
“If consumers maintain interest, a deeper strategy can follow,” said Chen Bo, a marketing professor at Sungkyunkwan University in Seoul. If not, the approach can easily shift as selling products online first is a lower-risk way to test demand, he added.
German supermarket chain Aldi tested the Chinese market in a similar way in 2017 through an online store with 500 to 600 own-brand products. Two years later, the firm opened its first physical store in Shanghai.
In May, American brand Costco generated interest among Chinese consumers when its logo appeared on the website of Chinese e-commerce giant JD.com. Unlike CU and Aldi, which tested demand online before opening stores, Costco had already built seven physical warehouses since 2019. The JD.com tie-up just expanded its reach to those who could not visit stores in person.