Sophie Kim is a normal-looking, attractive 37-year-old South Korean. But she may soon be disfigured – by a horn sprouting from her forehead.
Kim is the founder and CEO of Market Kurly, an on-demand, online food service player that is widely expected to become the next addition to South Korea’s growing herd of unicorns. At present, the G12 economy is home to the world’s fifth largest flock of unlisted start-ups worth one billion US dollars or more.
If you follow business trends in Korea, you will know Kim. And if you are a foodie or a techie, you will know Market Kurly.
In July, Kim was named “Top Female Founder in Korea” in a global study conducted by research and funding website Businessfinancing.co.uk, having lured $282 million. Remarkably, of that amount, more than $160 million was raised early this year when the pandemic was ravaging Korea.
Market Kurly, operating in the eat-at-home space that has been accelerated by Covid-19, meets the demands of 20-30-somethings who seek quality produce and enjoyable shopping experiences. The firm converges carefully curated foodstuffs, high technology operations and warp-speed delivery.
Early this year, the firm was valued at $780 million by Korean financial media, though Kim hints that the magic $1 billion dollar red line has already been crossed.
Kim is in for the long haul and anticipates an eventual IPO. In the meantime, bespoke back-office technologies – which Kim cites as a key factor in enhancing transparency when accessing capital – offer the company secondary business opportunities that hedge against any burst of Korea’s expanding unicorn bubble.
‘The shopping experience was horrible’
Kim worked at Goldman Sachs, McKinsey and Temasek, but it was while she was working at consultancy Bain in 2013-2014 that she decided to found a start-up. The inspiration was simple. She was convinced that she could do better than existing players in a key business.
Having graduated from high school, and then from Wellesley College in the United States, the then-newly wed Kim was appalled after returning to her home country by the available grocery offerings. “The food shopping experience was horrible!” she said.
At the time, shopping options were limited. Many “marts” in Seoul were Mom ‘n Pops with concrete floors, poor lighting and foodstuffs piled up on dusty shelves. Alternatives includesd raucous traditional markets, or impersonal edge-of-town hypermarkets.
“Offline retailers didn’t care about quality, they defined their job as real estate not retail,” she told Asia Times.
“They secure the right location in a dense traffic area. It is about location, not merchandizing. But from the customer perspective, what you care about is quality and selection. That did not exist in offline.”
As a professional in retail consultancy at Bain who described herself “passionate about food,” the idea of online grocery provision was natural. What made it possible were economic changes that had pushed the “Korean dream” beyond the reach of younger citizens.
Korea goes YOLO
“A whole generation of people in their 20s and 30s can no longer afford traditional Korean status symbols like big houses and cars,” she said. “If you cannot afford such things, you may as well focus on daily activities – nice foods and nice activities.”
Indeed. The evolved tastes of the YOLO (“You Only Live Once”) generation – for everything from craft beer and designer coffee to artisanal baked goods and organic vegetables – stands in stark contrast to those of more austere older Koreans.
“Thirty years ago Koreans did not care about what they ate,” Kim said.
She also noted evolving shifts in professional aspirations. Younger Koreans were giving up on the previous top career choice of white collar positions at conglomerates, which have been offshoring for decades and which no longer offer a job for life.
The result has been an explosion of entrepreneurial small businesses.
“A lot of people decided to pursue their passion,” she said. And in a country where degrees used to be everything, young people started doing the unthinkable – abandoning hard-won educational qualifications.
“A lot of people who did MBAs in the USA went into bakery,” Kim said.
Hyper speed, hyper quality
Viewing these trends in 2014, Kim first envisioned an attractively designed offline shop outside Seoul, offering quality groceries at low prices. She soon realized that an e-commerce outlet would be cheaper than any offline options and would let her reach a wider consumer pool.
Still, the early aesthetic/merchandize vision informed the nascent online presence of Market Kurly, which was founded in January 2015.
“We were very much focused on content, so we had beautiful foods and long narratives about why this this is important, why this bread is very different,” she said. “When we opened the website, we got a lot of traction from food stylists and magazines as nobody had seen a site designed this way before.”
Kim also saw the need for speed because she had been frustrated by not having enough time to prepare food in the mornings while working at Bain.
At Market Kurly, she focused on high-quality, ready-to-cook meal kits. Orders made before 11PM are guaranteed delivery by 7AM next morning.
That became a key Market Kurly differentiator in a sector brimming with on-demand services. Yet neither presentation nor delivery were core competencies.
“At the end of the day, the service you provide is only added value,” Kim said. “The core product is what you deliver.”
Many of Market Kurly’s core products are sourced from boutique businesses.
“When we started out, small artisan companies could not work for big retailers, but we focused on creating the right customer experience,” she said. “If a supplier can only bake 30 breads a day, that is OK, that is the nature of the product, and we are famous for delivering such products.”
Ensuring quality became central to Kim’s managerial tasks. Seventy criteria are judged.
“Over the last six years, we have been operating a product committee that tastes and tests the products we sell,” Kim said. “I have chaired it for six years and have never missed a meeting.”
Growth: Covid-19 and beyond
According to figures from Market Kurly, the company has seen a compound annual growth rate of 3.7 times between 2015 and 2019. Revenues in 2019 were 428.9 billion won ($388 million), 157.1 billion won in 2018, 46.5 billion in 2017, 17.3 billion in 2016, and 2.9 billion in 2015.
This year to date, growth has been 100% in both volume and revenue, Kim said. And she admits Covid-19 has been a driver.
“The transition to e-commerce has accelerated, especially for a generation for whom e-commerce is not their thing. People in their 50s and 60s have started to shop online,” Kim said.
However, Korea contained Covid-19 without lockdowns. Kim said the pandemic helped but the company had been anticipating major growth in 2020.
In fact, Kim accessed “Series E” (5th stage) financing in February. The investors were largely American, and included DST Global, Hillhouse Capital and Sequoia Capital China, as well as SK Networks.
“Our Series E investors are the exact same pool as Series D, and many were in Series C, so it was predominantly the same main group of investors. They knew us inside out,” Kim said. Her original investors were predominantly domestic.
The Series E tranche was raised in the month when Korea became the first country after China to suffer a mass Covid-19 outbreak. “It was the worst time to raise money but they had trust,” Kim said. “They knew us inside out.”
Headquartered in the heart of trendy, high-tech Gangnam, Market Kurly has 966 employees and four warehouses nationwide, with a fifth under construction. It operates a vertically integrated cold-chain supply system, ensuring all products are delivered at appropriate temperatures. Delivery is handled by an in-house team and external drivers.
It kicked off its own in-house brand, Kurly’s, in February. The line now includes animal welfare milk, whole wheat breads, ham, kimchi, tofu and toothbrushes. Meanwhile, “Kurly Only” products, goods that can be purchased only at Market Kurly, account for 30% of all products sold.
While food remains the main category, Market Kurly has expanded into sectors that include kitchen supplies, health supplements and, especially, beauty and skin care products. It also imports and distributes overseas products, such as cheeses.
In the second of this two-part exclusive, to run in AT tomorrow, Kim discusses the sustainability of e-commerce models post-Covid; why unicorns are breeding so fast in South Korea and how self-developed operational technologies grant her company remarkable transparency and ex-sector business opportunities.