Korea’s online grocers feel the heat as cold chains face a melt-down test

Online grocers are reinforcing their cold chains as a summer of prolonged heat tests the overnight delivery of fresh and frozen food.

"Frozen products delivered at dawn arrived completely thawed," one customer of the e-commerce platform Kurly wrote in an online post. Another wrote that the box was so wet that water had pooled on the floor, and that the dry ice had entirely melted.

Similar complaints about Kurly deliveries have accumulated over recent days on online communities, neighborhood parenting forums and social media. The company built its name on overnight fresh-food delivery, and competitors working through the same weather are watching closely.

"Even a 1 degree Celsius [1.8 degree Fahrenheit] rise changes how fast fresh food thaws," a retail industry source said. "There is no rule that says this can only happen to Kurly, so companies are staking everything on keeping products cold."

The stakes have grown with the market. Online grocery transactions reached 52.3 trillion won ($37 billion) last year, more than three times the 17.17 trillion won of 2019, based on the Ministry of Data and Statistics' online shopping survey announced in February. 

There is room to grow. Only 28 percent of food sales were made online, much lower than online sales in other categories, like fashion at 33 percent, cosmetics at 41 percent, furniture at 50 percent and home appliances at 55 percent.

Longer stretches of extreme heat have made temperature control harder when customers have grown used to more sophisticated cold chains, and complaints now travel fast on social media.

Coupang is gradually replacing the nonwoven fabric in its reusable Fresh Bag delivery containers with plastic, which seals better and holds cold longer. During the hottest weeks, it packs 10 to 20 percent more dry ice and ice packs than usual.

"The competition to secure dry ice has been unusually fierce among retailers this summer because of the extreme heat," an industry source said.

Lotte Mart has spent about 200 billion won on its push into online groceries. At the Zetta Smartcenter it opened in Busan's Gangseo District on Aug. 7, robots work not only through the chilled aisles but inside a freezer zone held at minus 25 degrees Celsius, handling orders in conditions people could not work in for long.

Warehouse automation is now common, but automating that much of the work inside freezer and chiller zones is not. The center also monitors the internal temperature of its delivery vehicles in real time, keeping the chain unbroken from shelf to door. Lotte Mart says it will invest 1 trillion won by 2030 to build six such centers nationwide.

Shinsegae's SSG.com is as much as doubling its usual amount of coolant for chilled and frozen orders. The company said its grocery sales rose 12 percent in July from a year earlier.

Kurly says it was the first Korean retailer to run a cold chain covering every stage from intake to delivery, which it introduced in 2015. Some in the industry say the company's recent troubles derive from the record heat and the fact that the platform carries more fresh food than its rivals.

A Kurly source said the company had already increased its cooling materials.

"We increased the amount of dry ice and ice packs this summer and used foil coolants as well, but the unusual heat appears to be driving up customer complaints during delivery," the source said. "We will keep improving our packaging methods based on objective data and testing." 

BY LIM SUN-YOUNG [cho.yongjun1@joongang.co.kr]