"Oh? How Did It Know My Taste?" The Popularization of Meal Kits and the Meticulous 'AI' Behind It [Juhyung Lim's Tech Talk]

AI and Big Data IT Innovations Driving Meal Kit Popularization
Reducing Operating Costs through Demand Forecasting and Ingredient Management
Trend of 'Retail Tech' Integrating IT into Retail Distribution
Concerns over IT Becoming 'Surveillance Technology' in Some Circles

'Meal kits' that allow you to prepare a meal easily at home are gaining popularity. The photo shows meal kit products displayed at a large supermarket in Seoul last September. / Photo by Yonhap News

[Asia Economy Reporter Lim Juhyung] Recently, 'meal-kits,' products that package raw ingredients before cooking and deliver them, have been gaining popularity. While large e-commerce companies like Coupang and Market Kurly have primarily sold meal-kits, recently, small-scale retailers have also started delivering meal-kits bearing the names of famous chefs.

In fact, meal-kits can be a very challenging product for retailers. This is because they must order and package various types of raw ingredients separately according to newly developed menus every day. This structure inevitably leads to higher operating costs.

However, thanks to technological innovations such as artificial intelligence (AI) and big data, which have begun to be introduced into the distribution industry, the costs required to enter the meal-kit business are gradually decreasing.

The company that first launched the meal-kit business on the global stage is the German e-commerce company 'HelloFresh,' established in 2011. HelloFresh delivers meal-kits to the addresses of customers who pay a fixed monthly subscription fee and join the membership.

Interior view of a logistics center in the Berne region of Germany. The photo is not related to any specific expression in the article. / Photo by Yonhap News

More than ten years later, various meal-kit companies are competing in many countries worldwide. Representative examples include the U.S. company 'Blue Apron' and the U.K. company 'Gousto,' and in Korea, meal-kit specialized startups such as MyChef, Cookit, and FreshEasy have emerged.

Meal-kits have gained great popularity because they allow consumers to enjoy a proper 'home-cooked meal' simply by adding pre-prepared ingredients in the order of the recipe and cooking. According to data from the Korea International Trade Association, the U.S. meal-kit market size, which was only 150.1 billion KRW in 2013, recorded an average annual growth rate of 88%, dramatically increasing to 3.534 trillion KRW in 2018. It is expected to exceed about 6 trillion KRW this year.

Korea's market size, which was around 20 billion KRW in 2017, has also been growing significantly, nearly doubling every year.

In fact, ten years ago, meal-kits were a business with very high so-called 'entry barriers.' Generally, the distribution industry is a low-margin business due to the high costs of building logistics warehouses, establishing cold chains, and hiring personnel. On top of that, meal-kits require stocking a wide variety of fresh vegetables and meats tailored to diverse daily menus, making it by no means an easy business.

The recent significant reduction in operating costs for the meal-kit business is due to the distribution industry combining with tech platforms such as AI and big data, greatly improving efficiency.

The e-commerce business, including meal kits, has recently been combining with IT technologies such as artificial intelligence (AI) and big data. / Photo by Yonhap News

For example, the famous British meal-kit startup Gousto heavily relies on AI and big data analysis. Gousto introduces 30 to 40 new meal-kit menus to its subscription customers every week and manages 'demand' by displaying recommended menus tailored to each customer's preferences on smartphone applications or websites.

Additionally, AI predicts customers' ordering patterns and orders the necessary vegetables and meats the day before for same-day delivery. Similarly, leftover ingredients after meal-kit production are pre-allocated to other products to minimize wasted resources.

Although not visible to the naked eye, business efficiency is maximized and operating costs minimized through computer software with excellent data analysis capabilities.

Not only meal-kit companies like HelloFresh and Gousto but also e-commerce companies have increased productivity by integrating IT into distribution, so-called 'retail tech.'

Amazon's cloud computing server 'AWS' of the US e-commerce company / Photo by Yonhap News

A representative example is the U.S. e-commerce company Amazon. Amazon stores various distribution-related data on its cloud computing servers called 'AWS' and analyzes this data to improve operational efficiency.

For instance, Amazon analyzes the movement patterns of workers in logistics warehouses to provide optimized routes for their tasks.

However, there are concerns that such retail tech innovations may worsen the working conditions of distribution workers.

According to a report released last September by the U.S. think tank 'Open Markets Institute,' Amazon has deployed various software, sensors, and scanners within its warehouses to monitor workers for operational efficiency.

The report points out that through this, Amazon can obtain sensitive personal information of workers and potentially prevent labor union formation movements.

The think tank stated in the report, "(IT technologies such as retail tech) can evolve into worker surveillance technologies rather than tools for efficiency improvement," and "especially if leading companies like Amazon proactively adopt surveillance technologies, there is a concern that other competitors in the industry will adopt similar methods." It urged leading companies to set an example and regulatory authorities to take action.

This content was produced with the assistance of AI translation services.