Tiring! My wife and kids cheered every time the alarm went off on my smartphone. It was the sound made whenever a product was sold through Neochair Co-CEO Kim Jae-min’s ‘Amazon Seller App.’ Neochair launched its office chair on Amazon in the US in the second half of 2019. It was a time when less than 10 units were sold per day. At the time, CEO Kim’s wish was that the alarm would be so loud that he couldn’t sleep at night.

Four years later, Neochair is the undisputed No. 1 in the Amazon office chair brand category. It has been in the top spot since the end of last year and has not come down from its position as the top predator. It has sold an average of 2,000 units per day and has even sold more than 10,000 units per day. This is an achievement made in a situation where famous domestic chair brands such as Sidiz are not even in the top 100 on Amazon. How was this possible?

The first competitive edge is cost-effectiveness. Neochair has been pursuing a low-price strategy since its inception. The goal was to provide consumers with the best quality in its class at a reasonable price. This was because it was judged that this would increase market dominance and enable sustainable management. Neochair’s management philosophy is also “Let’s become a company that makes less profit, and if we are going to make a profit, let’s supply it at a cheaper price.” Lee Sang-hoon, a college classmate of CEO Kim and co-CEO who leads Neochair, emphasized, “I think it is right to return benefits to consumers as much as possible, unless the money is invested in employees or product development.”

Neochair's second competitive edge is its logistics know-how. The shipping cost for shipping chairs produced in China and Vietnam to the U.S. is the lowest rate applied to not only domestic large companies but also global top companies. The 'last mile' delivery cost applied to the distribution logistics system in the U.S. is also optimized to the lowest rate. This is through the independent network established by CEO Lee, who came from a logistics company. Neochair is also promoting the introduction of a 'vertical smart warehouse' that increases product space utilization and introduces a logistics automation system to maximize loading efficiency.

The third competitive edge of e-commerce-based startup Neochair is big data analysis. It analyzed 100,000 customer reviews one by one to build a customized detailed page. It is collaborating with the CX Lab led by Professor Park Do-hyung of Kookmin University to apply AI demand forecasting and other methods to the development of new products. CEO Kim said, “We focused on providing optimized information by analyzing consumer review patterns and unique emotions by product category,” and explained, “As we applied this method, Amazon sales began to increase in earnest.”

Neochair employees with a strong voluntary work disposition are also considered competitive. There are 20 employees who speak English, French, Chinese, German, etc. They are pushing the two co-CEOs who were trying to focus on the startup item, office chairs, to expand the product line. CEO Kim said, “It is a more proactive situation where employees should grow the company than the CEO.” Starting next year, Neochair plans to expand the product line to include home furniture such as desks, mattresses, and sofas.

Last February, it also entered the domestic online market. It grew by an average of 46% per month as consumers responded to its cost-effectiveness and quality. It is already No. 1 on Coupang. CEO Lee emphasized, “There are many companies that do not develop products but sell 10 million units of the same mold frame instead of 10.” He added, “As the prices of domestic chair brands are at least twice as high, Neo Chair’s competitiveness will become more prominent.”

Neochair's sales are expected to reach 70 billion won this year. This is a 30% increase from last year. Given the annual growth trend, the company expects that it will easily reach 100 billion won next year.

Riding on the success of Amazon, Neochair recently entered Japan. It plans to expand into the UK, Germany, France, Canada, and Italy starting next year. Neochair’s benchmarking targets are Best Office and Yahee Tech in China. These are companies that handle office and home interior furniture and generate annual sales of about 1 trillion won in the US and Europe, respectively. CEO Kim said, “Since we have already won over competitors in the office chair market, it will not be difficult to become a global top e-commerce company in the furniture industry even if we expand our product line.”

Source: Hankyung