Lotte Confectionery, the country’s major snack maker, will a subscription service of sending a snack box every month to its subscribers. Photo courtesy of Lotte Confectionery

Virus pandemic brings about changes in consumption

The subscription economy has been a familiar concept as an increasing number of companies came up with new business formats to win the hearts and minds of end consumers.

According to Wikipedia, the term refers to a business model in which a customer must pay a recurring price at regular intervals for access to a product.

And the COVID-19 pandemic accelerates the adoption of the subscription economy as people try to avoid face-to-face contacts.

From the perspective of customers, the new model is welcome because it guarantees re-accruing revenue based on stable relationship with end customers.

South Korea is not an exception in accepting the new business model.

Lotte Confectionery, the country’s major snack maker, announced on June 17 that it will introduce a subscription service.

When a customer pays 29,700 won, the Seoul-based company will deliver a snack box every month.

The new service would be available to only 200 in the beginning. Lotte plans to expand the number later on.

We plan to introduce a similar service for ice creams. It would be a new growth engine for us,” a Lotte official said.

The company is an affiliate of Lotte Group, the country’s fifth-largest business conglomerate.

Late last month, E-Mart also started a similar service for pizza. E-Mart is the country’s largest discount chain affiliated with Lotte’s crosstown rival Shinsegae Group.

The two groups are South Korea’s top two retail and distribution conglomerates.