Mozza’s new neighbourhood commerce combines an omnichannel business model with an offering that focuses on SKUs unavailable anywhere else in the country, starting with freshly made burrata cheese
Mozza is a new food retail and delivery start-up in Korea, currently seeking $1.5 million in seed funding. The new venture is the brainchild of John Shin, the founder of Kri Kri Korea, a company that has been importing and distributing Greek yoghurt from Greece and Parmigiano Reggiano cheese from Italy since 2015.
In exclusive interview with NutritionInvestor, Shin said the start-up is creating a neighbourhood commerce (n-commerce) building on the changing landscape of the food retail scene in Korea.
“Korea is changing, and the changes in consumer behaviour are not yet matched by suppliers. There is also a new competitive dynamic in which new upstarts challenge the old order by moving one step ahead of everyone else including the customers themselves,” said Shin.
For Shin, Mozza enters a crowded marketplace with highly differentiated USPs – unique products that are unavailable in the country, yet with very high pent-up demand, and the combination of online-offline-omnichannel business models plus 30-minute delivery service within a one-kilometre radius from the stores.
“Mozza combines a business strategy based on carrying very few brands and SKUs that cannot be found anywhere else in the country,” explained Shin. “Mozza will carry 400 SKUs in groceries and 20 menu items in the restaurant and takeaway with monthly rotation. For easy-to-understand analogies, think Eataly, Costco, and DoorDash combined into one concept.”
The business will focus on best-selling menus and grocery SKUs, starting with freshly made mozzarella and burrata cheese.
Shin said Mozza will import buffalo milk cagliata, the curd that is used to make milk and mozzarella, and that Italian and Korean cheesemakers will craft cheeses at each Mozza store. “This concept is Mozza’s monopoly in Korea and never seen before,” he added.
Mozza also has exclusive import agreements with food brands and restaurants that sell par-baked or par-cooked items. “We are trying to concentrate on a very few high-value items unavailable anywhere else in Korea,” he said.
The start-up has already struck an agreement with Roberta’s Pizza from Brooklyn, New York, to become its Korea-exclusive import partner of par-baked pizzas.
Shin has embarked on the new business with a team of fellow entrepreneurs, including Shinje Sung, a former Korea master franchisee of Pizza Hut; restaurateur Jiho Ryu; and digital marketing specialist Shinwoong Cha.
Food retail in Korea
The food retail in Korea is going through consolidation in both online and offline offerings. Coupang, the 11-year-old e-commerce marketplace equivalent of Amazon in Korea, entered the New York Stock Exchange last week in an IPO that raised $4.55 billion and valued the company at $60 billion.
Market Kurly, which has been operating for seven years and specialises in next-day online delivery of high value food, is gearing up for an IPO in Q4.
Shin argued that Coupang and Kurly are loss-making businesses because their marginal cost is greater than their marginal profit.
“[These businesses] are trying to sell six million SKUs and 20,000 SKUs, respectively, to too many people that are thinly dispersed. Mozza is trying to narrow the focus on high-income neighbourhoods with highly differentiated products and menu items. Mozza wants to grow from zero stores to 50 stores in six years,” he said.
The $1.5 million in seed funding that Mozza seeks to raise will go into the development of a mobile app, which is benchmarked to Kurly’s. Shin said the app will combine a customer-facing order management system, with a warehouse management and sourcing and partners management systems.
A proportion of the proceeds is earmarked for the lease of strategic locations in Seoul, including basic infrastructure, including cold chain freezers and chilled walk-in warehouse, store design and kitchen equipment, as well as for sourcing the ingredients and packaged items.
Shin said Mozza will source 400 or so exclusive brands and SKUs, of which 90% are imported brands and 10% domestics, and that all Mozza stores will have a co-located, small-scale cold chain. “This backend innovation of co-locating a store with its warehouse enables 30-minute deliveries as many times a day as there are orders on Mozza mobile app,” he said.
The n-commerce business model is expected to reach gross revenues of $4.4 million in the first year, assuming sales of $13.2 million (15 million South Korean won) each day. “This is a very low conservative estimate because the smallest unit of our flagship product – 150 grams of mozzarella or burrata di bufala – is priced at 15,000 South Korean won. So, it takes only 1,000 units of these to rack up 15 million South Korean won each day,” said Shin.
Shin belives that having this monopoly product in the country will generate demand in excess of 1,000 daily average units per store. “And this does not even include 399 other SKUs and 19 other items in the menu,” he said.
Mozza is targeting a population with a disposable income of $135,000 or more, with a monthly food spending of $3,800 or more. “The addressable market size is two million individual shoppers,” he concluded.
Date published: 22 March 2021