How Korean Startups Tapped Into A Billion Dollar Government Effort


businessMany decades ago in a high school in the US, a fresh sophomore by the name of Michael Jordan had just been turned down from his high school basketball team. He was deemed too short to play for his varsity basketball team and by all accounts, devastated. Then he spent the next summer honing his game until finally he went try-outs again; this time, significantly better. Jordan would later go on to dominate basketball like no one before him.

While it’s hard to match Jordan’s dominance in any particular area, South Korea has gone through a similar ride from hardship to success.

Korea’s rise as Asia’s trendsetter has been astounding. Korean Fashion, music, TV Dramas, movies, food, cosmetics and plastic surgery have become mainstays for a large proportion of Asian youth. Korea’s global cultural spread has even touched Latin and North America and parts of Europe. Korea has become a star; a place to go if you were ‘cool’.

This rise didn’t happen overnight and didn’t come without decades of planning and hard work, fuelled by a yearning for recognition, as surmised by author Euny Hong: “Koreans have a deep-seated desire to see the nation recognized and validated. We study harder than anyone in the world, we work more hours, and it’s all because of this need to see us finally come on top.”

This desire for validation saw Samsung playing catch up with Apple; K-Pop stars trained from childhood to succeed; and the Korean search for outward perfection has resulted in booming fashion, domestic skincare and cosmetic surgery industries.

Over the years the Korean government has spent billions of dollars supporting the country’s creative industries and Korean icons are finally gaining global prominence.

Titans like SM Entertainment, Amore Pacific and TheFaceShop are now fulfilling a hunger for Korean exports and Korean pop stars and actors are delighting global audiences. But there’s still vast opportunities to export Korean cool to the world and that’s where Korea’s new breed of entrepreneurs come in.

Here we look at some of the up and coming brands that are building robust business models around ‘Korean Cool’.

Founded in 2012 YDEA developed Codibook that has become an extremely successful niche online fashion mall. Their unique selling point (USP) is that their collections are curated by Korea’s top fashion trendsetters. Fans love emulating their idols and on Codibook they can truly feel like they have stepped into the wardrobe of their favorite star. Three years after founding, the company has roughly 800,000 customers.

“Fashion is subjective,” said Louis Kang, one of the company’s co-founders. “You can’t just make a rational buying choice by comparing specs, like you can with a computer. Everything has to match your personal taste. That’s why we’ve taken the approach of curated collections.”

After establishing roots in Korea, 2015 saw Codibook make confident steps towards overseas expansion, bringing Korean fashion to a wider audience. Codibooks has partnered with Singapore’s enormous Qoo10, presenting the fashion portal with direct relationships to over 20 of Korea’s top fashion brands.

In a similar fashion, Codibook’s closest competitor Polyvore has specialized in taking Asian fashion to Western markets like the United States.

“We will differentiate ourselves by helping customers find high quality clothing that they love, rather than just competing on price,” Kang said. “Any company can try to lower prices, but only companies that are passionate about fashion can truly keep on top of the trends and repeatedly delight customers.”

Stripes, another Korean fashion disruptor is working to make it more convenient for Korea’s perennially overworked salarymen to keep up with their fashion, while attending to their demanding careers. They offer custom fit shirts, coats, suits and chinos with stylists visiting clients to take measurements and select fabrics in their homes or offices.

While Seoulites have been able to get tailor-made dress shirts for decades, the inconvenience of visiting a tailor shop has been a major barrier to entry.

“Surprisingly, I see our main competitor as Uniqlo,” said Inggeol Kim, who leads strategic planning at Stripes. “They do a very good job with basic clothes, and that’s what Korean men want. We’re also focused on basic designs, but we’re making them fit, feel, look and last much better than what you can get from a fast fashion retailer.”

Stripes (which will turn three in January), eliminates the inconvenient steps traditionally involved in custom clothing. While there are some challenges involved in sending stylists out on house calls, the business model is paying off. More than 90 percent of the people who follow the company’s Facebook ads to its website schedule appointments and the company has more than 30,000 customers’ measurements in its database.

“It’s very costly for us to offer this level of in-home service, but it has helped us build our customer base very quickly,” said Lee Seung-jun, who co-founded the company with Chang-hoon Lee. “Our long term success depends on our ability to satisfy our customers time-and-time again so that they come back to our website and place additional orders. We’re using our existing customer data to develop new styles, especially for Korean men.”

To ensure their continued success, Stripes has optimised their sales process by giving each of their stylists an iPad with custom software to guide the sales process and show customers how options for styles and fabrics will look when applied to their specific clothing.

Like Codibook, Stripes has made Singapore its first overseas port of call, setting up a branch there in 2015. As 2016 unfolds, the company plans to establish itself in other major metropolitan business centers across Asia, including Hong Kong, Bangkok and Tokyo.

One of the largest consumers of Korean pop culture is China, and MEMBERSHEEP is ready and willing to feed that addiction.

MEMBERSHEEP provides a marketplace which purchases products directly from each brand, cuts down the price and delivers it to retail shop owners around the world. The Chinese retailers need a stable and trustworthy supplier of branded products. The Chinese Government supports and encourages direct overseas purchase to avoid faking branded products in the market. Realizing the need to build reliability, MEMBERSHEEP is initially targeted the Chinese market.

Having worked with a host of Korean brands looking to make inroads into China, MEMBERSHEEP’s work has not gone unnoticed. The e-commerce startup counts a variety of brands under their distribution tree such as Korea’s SBENU, SIWY and global favorites like Carhartt, Adidas, and Levi’s. With their body of work the platform became one of the first to sign with Chinese e-commerce giant, Alibaba, on their wholesale platform.

Once a brand is accepted by MEMBERSHEEP, CEO, Kim Jinsung states that “the team handles everything from uploading the product online to customer service. Thereby, MEMBERSHEEP provides a comprehensive service on behalf of the brand.”

With a former Coupang employee founder, MEMBERSHEEP seems poised to continue taking advantage of the Chinese hunger for Korean pop culture.

In September, the company reported having helped over 50 brands launch across Taiwan, Korea, Southeast Asia and China, seeing 170% growth in their service during that time.

As the Hallyu (literally the Korean wave) continues, there’s no doubt that Korean brands will seek to capitalize on the market in Asia Pacific and Southeast Asia. Banking on their existing successes, MEMBERSHEEP is primed to service those brands.

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