Coupang vs CJ CheilJedang… ‘Battle of Hetbahn’ in ‘甲 and 甲’, who will be the final winner?

CJ CheilJedang, which produces popular foods from Hetbahn to bibigo dumplings, and Coupang, Korea’s largest online retailer, are fighting a fierce battle of nerves over the venture while negotiating a sales contract. The incident occurred when Coupang recently suspended all orders for CJ CheilJedang products. Due to this incident, if the stock of over 1,000 CJ ​​CheilJedang products sold in Coupang, such as Hetbahn and dumplings, is out of stock, you will not be able to purchase them in the future.

Regarding the background of stop orders, the two companies make different claims. First of all, CJ CheilJedang explained about the suspension of this order, “Coupang stopped ordering due to a disagreement about the product profit rate during the negotiation process next year.”

Coupang refutes that it was due to ‘CJ CheilJedang’s failure to comply with the contract’, not margin rate negotiations. It is an explanation that the order quantity promised at the time of the contract could not be kept. An official from Coupang claimed, “Since the beginning of the year, CJ has been demanding price increases several times, albeit absurdly without supplying the promised amount.”

According to the distribution industry, CJ CheilJedang’s delivery rate is known to be in the 50-60% range. It promises 100 items, but actually only sends 50 to 60 items. This problem of non-compliance with delivery rates is also a factor that hits online distributors harder than offline distributors. This is because online distributors pre-let the distribution center space for the amount of products contracted for, and when only 50 to 60% of the products arrive, the space that is n remaining use it and leave it. Ultimately, this results in lost sales for online distributors.

CJ CheilJedang’s Hetbahn product, which is in the middle of a suspension of orders from Coupang. [연합뉴스]

However, CJ CheilJedang is in a position that such a claim is unfair. An official from CJ CheilJedang explained, “In the case of Hetbahn, the representative product, supply is scarce, so we cannot fill the delivery rate in the same way elsewhere.”

Regarding the price increase, he said, “As we raised the price of Hetbahn last March, we naturally raised the selling price of the online channel.”

Although the claims of the two companies are mixed, the distribution industry agrees that this conflict is an ‘endemic problem’ which has continued from the past. It is noted that the conflict between manufacturers and distributors is a bad practice that has been repeated since traditional offline distributors in the past. In particular, it is explained that this conflict is repeated only in the case of manufacturers with strong brand power.

A distribution industry official said, “Distributors and manufacturers are fighting for leadership over unit prices and discount events every day.” It’s something that can be done,” he explained.

At the moment, the order has been suspended, but there is hope that negotiations will be held again in the end. Because both companies give up on each other, the loss is great. For Coupang, it is difficult to give up popular sales products that can attract consumers, and CJ CheilJedang also finds it difficult to give up sales from the largest online retailer in Korea.

Another industry insider said, “It’s common to hold orders over contracts that lead to sales.”

Reporter Yejin Rae rayejin@edaily.co.kr