The Importance of ‘Service First’ in Selling Imported Goods

Korea’s masses of foreign visitors and residents over the past 20 years have sought hard-to-find goods that most retailers here wouldn’t dream of carrying.  As the demand began to roar, the nooks and crannies of Seoul’s expat playground, Itaewon, experienced a covert renaissance.

We knew them as black markets: places where imported goods were brought in by whatever means necessary and marked up for retail, usually at ridiculous prices. One of the early start-ups was the nameless Red Door shop, named for its distinctive entrance. The fact that it was an otherwise unmarked storefront should indicate how legitimate this business was. Nevertheless, foreigners from all over the country would trek there to buy overpriced deodorant, macaroni and cheese, herbs, spices and other rare items that the owner had procured through the nearby U.S. Army PX at Yongsan Garrison. Despite the dodgy tactics to stay in business, the Red Door lasted for over 15 years before being shuttered forever in 2011. But the lesson from its business model was clear: When it came to the small-scale sale of foreign goods, there was a lucrative market that Korean store owners could control and capitalize on, if they made the effort.

Another early adopter who catered to the demand was Hannam Supermarket, an alternative to Red Door that was located near Hangangjin Station.  Despite suffering from a chorus line of complaints that called it out on price gouging and substandard service, they also preserved for awhile, but like Red Door, eventually packed it in.

However, judging from the feedback from expat proprietors in the area who depend on imports for their restaurants, the pricing and service problems are not an Itaewon-centric trend.  Korean-Canadian Paul Hong of Maple Tree House knows all too well about how Korea operates on a short-term mindset when it comes to pricing and service.  “Every week, I have Korean meat suppliers coming into my restaurant, trying to get me to buy their product.  And they are all about price and product, with no consideration that service is what really makes the difference that can set businesses apart,” says Hong.

With Maple Tree House and its three Seoul locations cranking out over 150 million won in meat each month, it’s no wonder why he receives these kinds of visits.  But the account managers who come to his door are obviously not close enough to the core of their businesses to know how to deliver on corporate service values, if any even existed internally to begin with.  “These guys would seek my business, which would be lucrative for them on the long term.  But from the outset, they want me to pay 300,000 won for the product samples they want me to try.  It’s a waste of time to deal with people who are clearly thinking in a box.  However, if I was representing Outback and all that potential to these account managers, I’m sure their attitude would come off differently.”

Whether it’s selling Reese’s Pieces at a 700 percent markup in imported goods markets or delivering watered-down service to small yet successful businesses, it’s all interrelated: Korea tends to dilute service standards over small financial gains when dealing with relatively smaller buyers on both retail and wholesale levels.

Long-time expat Kip Richardson saw this weakness as an opportunity.  Opting to inject a service-oriented business model into his own business, High Street Market, he is attempting to bring an air of legitimacy to the past turbulence he believed has gripped the import market industry in Korea.  In addition, he has seen to it that these service levels have crossed over into Authentic Meats, his other business that deals in wholesale meats and products for restaurants in Korea.

According to Wayne Gold, owner of Wolfhound Pub and Reiley’s Taphouse, “HSM and Authentic Meats go so far as to take my recipes and pre-make them before shipping, which reduced my manpower costs in the kitchen.”  When faced with the challenges of navigating a set of contradicting English and Korean manuals for some new kitchen equipment, Dan Vroon of Craftworks called up Kip for some advice, who promptly sent over a staff member to help them sort it out, despite it having no direct link to their meat supply agreement.  It was just a show of respect to a customer and putting service first, even when money is not presently in play.  Maple Tree’s Hong remembers a similar experience: an instance when Kip’s Authentic Meats sent him 10 million won in cuts of meat that weren’t up to expectations and Kip made the prompt decision to take a loss on the full amount and send him the correct order.  “It’s a culture thing, as much as it is a language thing,” Hong explains.  High Street Market’s retail customers are also singing a similar tune.  “I used to go out of my way to get certain things from Itaewon. The fact that HSM delivers these things has been a game-changer”, says Brian, a long-term expat.  Another customer, Jen, admits it has been a struggle for finding vegan products, let along retailers who have their heads around how customers think.  She states, “So many stores try to provide these things and get foreign feedback on how to improve, but there’s a general lack of follow-through.  My experience with dealing with HSM staff has revealed that not only can they engage in knowledgeable conversation about vegan products, but they actually work to implement customer feedback.”

Where foreign expats have established the demand, Koreans have often fumbled on how to service it.  But customer-first enterprises led by expats like Kip Richardson are snatching up that ball and finding themselves alone in the end zone.  Only time will tell if Korean businesses will notice how the game is changing and evolve into a service-driven mindset when it comes to individual buyers and small businesses.



Groove Korea
Author: Craig White
Tuesday, June 25, 2013

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