CU in China: Why South Korean retail giant is adopting 'online first' strategy

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