Recently, more pharmaceutical companies have been entering Asung Daiso Co. The range spans from health functional foods to health foods and cosmetics. Asung Daiso Co. directly purchases products. In the pharmaceutical industry, the reaction has been that "the advantage is there's no burden of returns."
Because Asung Daiso Co. directly purchases products, it basically does not accept returns even if inventory remains in stores. Its policy is to handle products internally even after the expiration date. This is possible, it said, because orders are placed based on internal analysis of sales trends.
Asung Daiso Co. orders only the minimum quantity when first stocking a product. It then watches sales trends and proceeds with additional stocking. Rather than overordering at launch, it orders an appropriate quantity to fit on-the-ground conditions, so inventory rarely remains, it said.
An Asung Daiso Co. official said, "As a rule, we operate stores without returns unless there are quality issues such as product damage or defects," adding, "The products currently remaining in stores were launched last year, so their shelf lives have not yet expired and they can be sold normally."
Pharmacies also sell not only medicines but health functional foods and cosmetics. Although it varies by pharmacy, there is said to be a tendency to order relatively ample quantities. It is an unavoidable structure in which some products are returned after their expiration dates. In such cases, the pharmaceutical company disposes of the products, which directly leads to expense. A pharmaceutical industry official explained, "Pharmacies don't know which patient will come in and what product they will seek, so even if they stack products, they have no choice but to secure inventory."
There are also differences in product turnover. At Asung Daiso Co. stores in major commercial districts such as Gangnam, Hongdae and Myeong-dong in Seoul, not only general consumers but also foreign tourists shop for daily necessities and at times naturally purchase pharmaceutical companies' products in large quantities.
Pharmacies, for their part, inevitably focus more on medicines than on health functional foods and cosmetics. This tendency is especially strong for pharmacies near hospitals. A pharmaceutical industry official said, "In the case of prescription medicines, pharmacists must dispense them directly, so when it's busy, it can be difficult to also tend to health functional foods and cosmetics."
At Asung Daiso Co., prices are the same at all stores. They are usually in the 2,000–5,000 won range, cheaper than at pharmacies. Prices were lowered by adjusting ingredients and dosages. By contrast, pharmacies have various supply routes and prices can differ by store. Sometimes they transact directly with a pharmaceutical company, and other times they bring in products through wholesalers or consignment firms. The more intermediaries there are, the more the final consumer price set by the pharmacy will inevitably vary.
Pharmaceutical companies currently in Asung Daiso Co. include Dongwha Pharm, Yuhan, Chong Kun Dang pharmaceutical, Dongkook Pharmaceutical, Daewoong Pharmaceutical and Ahngook Pharmaceutical. Dongwha Pharm introduced "Pyeonan Hwal," a Asung Daiso Co.-exclusive version of Hwalmyungsu, and the initial batch sold out. A "Fusiderm" cosmetic, based on the active ingredient in the wound treatment Fusidic acid ointment Fucidin, also entered the stores.
Chong Kun Dang pharmaceutical sells health functional foods under the brand "Daily Wise." It offers small packs containing only necessary ingredients such as multivitamins, minerals and omega-3. Yuhan has placed probiotics, and Dongkook Pharmaceutical is showcasing "Madeca" cosmetics containing the active ingredient of Madecassol at Asung Daiso Co.
Asung Daiso Co. has been selling pharmaceutical companies' health functional foods since last year. At the time, pharmacists pushed back and Ilyang Pharmaceutical withdrew. Although health functional foods sold at pharmacies account for only 4% of the overall market, pharmacists were concerned that other over-the-counter medicines might also end up being sold by retail chains.
Pharmaceutical companies, mindful of pharmacies, are cautiously expanding their entry into Asung Daiso Co. A pharmaceutical industry official said, "If we enter Asung Daiso Co., not only is the inventory management burden lighter, but we can draw in younger customers at competitive prices in accessible stores." The industry is watching to see whether health functional foods and similar products sold at Asung Daiso Co. can expand the ecosystem.