【Fortune Korea Aug 2017】 Atomy’s Venture to Make ‘The 1 Trillion Won History’

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COVER STORY : Atomy’s Bold Moves
Making ‘1 Trillion Won Sales’,
History With Absolute Price and Absolute Quality

‘Atomy rewrites network marketing history’ - the catchphrase has been put forward by Atomy since its establishment. Today, the multi-million dollar network marketing company is living up to this motto, expanding its empire beyond the domestic market in Korea.

Atomy’s explosive growth is attributed to the company’s CEO, Mr Park Han-Gill. He advocates standard and principle management to dispel myths and bad credits (public’s confusion over network marketing which is a legal distribution model and a pyramid scheme) associated with network marketing.

Atomy is strengthening its brand identity by putting forward ‘Absolute Price, Absolute Quality’ strategy - a legitimate distribution model to create jobs and benefit consumers. To Atomy, its direct competitors are not network marketing companies, but various distribution channels. Today, the company is challenging conventional distribution channels such as shopping malls, discount stores, online malls and home shopping networks. Atomy’s surge in sales is a testament to its continued effort. Last year, Atomy recorded sales of 778.4 billion won (based on individual financial statement), product return rate of 0.15% and the lowest sales management cost in the domestic network marketing industry, making it the most sought after network marketing brand (second largest) in Korea. Atomy’s high sales growth rate has allowed the company to carry out its dramatic overseas expansion and surpass the growth rate of Amway, the biggest network marketing company in Korea.

Atomy is painting a big picture. The multi-million-dollar company aspires to expand its empire beyond its domestic borders, to become a number one distribution company worldwide. Since setting up an overseas office in Seattle back in 2010, Atomy has established its presence in ten countries in just seven years. Industry analysts foresee that Atomy’s growth will accelerate if the company successfully enters China and India. Can Atomy’s dream of becoming the ‘global distribution hub’ come true? Fortune Korea looks into the rise of Atomy, a young eight-year-old company that is fast approaching the ‘1 trillion won sales’ mark.
Article by Ha Je Heon azzuru@hmgp.co.kr Photo by Cha Byung Seon acha@hmgp.co.kr

01 Secret to Atomy’s Enduring Competitive Advantage

Strengthening product power through thorough quality control
Eliminating price bubbles by reducing sales management cost

Atomy is one of the fastest growing network marketing company that advocates ‘Absolute Price, Absolute Quality’strategy. Fortune Korea find out the rise and current dominance of Atomy in the domestic network marketing industry.
Article by Ha Je Heon azzuru@hmgp.co.kr Photo by Cha Byung Seon acha@hmgp.co.kr

‘Atomy’ - this name may be unfamiliar to some of our readers. Founded in 2009, Atomy is a network marketing company started in Korea. The young eight-year-old company has witnessed an explosive growth since its establishment and is currently the second largest company in Korea’s network marketing industry. Atomy recorded the sales of 778.4 billion won (excluding overseas sales) last year, an 11.6% rise from the previous year’s sale. Since 2010, Atomy is continuing a double-digit growth. As Atomy’s revenue grows, the industry experts predicts that the company will soon take over Amway as the leading network marketing company in Korea.

The term network marketing is synonymous with multi-level marketing. To date, there is a negative association attached to the business model. Network marketing is a perfectly legal and legitimate form of distribution. A cooperative has also been
established by the industry members to prevent consumer and member exploitation and damages. With this basic background information, there is no reason to show prejudice toward Atomy’s business model.

Atomy’s Number One Priority: Price and Quality

“I hear that the phrase ‘just like Atomy’ is spreading like wildfire amongst the network marketing industry insiders. I believe that Atomy is fast becoming a textbook example of how a network marketing company should operate. Despite much effort, I understand that the network marketing business model has been a frequent subject of criticism. Criticism was due to some illegitimate network marketing companies which emphasise high initial start-up costs and exaggerated pyramid compensation schemes that resulted in victims.”

CEO Park Han-Gill said he is saddened by the negative associations attached to the business model that give even healthy and legitimate network marketing companies a bad name. A simple explanation of a network marketing business is that it is an online shopping channel with membership programme but no physical store. If you register as a member of the company, you can purchase a quality product at a discounted price. At Atomy, the membership also allows you to get a refund for a product that you return. For the members who have significantly contributed to the company’s sales growth, he or she will be rewarded according to the compensation programme. According to Korea Fair Trade Commission (KFTC), last year’s Atomy membership size was 280 million members. Today, a growing number of Atomy members actively pursue healthy businesses through the company.

“Network marketing is just one of the many distribution channels. As the industry matures, it is increasingly contributing to Korea’s growth. What we need to do is to overcome the stereotypes about a network marketing business. We should also look into developing policies to help the industry to advance”, said Mr Han Sang Lin, a professor at Hanyang University in Korea.

Atomy’s historic growth can be attributed to CEO Park Han-Gill’s “Absolute Price, Absolute Quality” principles. Atomy’s competitive advantage can be clearly represented by the Four Ps of marketing - Product, Price, Place and Promotion.

The first secret to Atomy’s success lies n its high quality products. Today, Atomy’s products range from health supplements to cosmetics to food items such as shampoo, dish washing liquid, instant noodles and men’s undershirts. Atomy is supplied with all these products from its “team members (Atomy addresses all its suppliers using this term as it believes the supplier and the distributor have to work as a team to achieve the best result)” - the suppliers who can manufacture products that can satisfy Atomy’s “Absolute Price, Absolute Quality” strategy. Product quality is always Atomy’s top priority. “No customer would complain if your product’s quality worth significantly more than its price. At Atomy, our efforts are spent mostly on making sure we inform our customers about the origins of all ingredients used in our products, packaging, labelling, as well as guaranteeing customer safety and convenience”, explained CEO Park Han-Gill.

Every year, Atomy thoroughly inform its “team members” about the company’s quality management policies. It also makes sure they register all their concerns and challenges. Alongside these efforts, Atomy collaborates with SGS Korea, the world’s leading inspection, verification, testing and certification company to conduct product quality examinations every two to three years, to encourage its “team members” to continuously monitor and improve the quality of their products.

Another key competitive advantage of Atomy is an affordable price tag. CEO Park Han-Gill has spent much time brainstorming how he could develop high quality products at low costs so he can transfer the savings to the customers. “Quality products at affordable price are easy to sell. Atomy tries its best to set the lowest price point possible for every product it delivers. This is only possible with a strict cost control and low marketing costs. We have removed all the price bubbles”, said CEO Park Han-Gill.

Crown Master Park Jung Soo
Shares About Atomy’s Strength
Crown Master is one of Atomy’s promotional titles given to its members according to their performance level. The highest promotional title one can achieve at Atomy is Imperial Master, followed by Crown Master.

Q. What is your secret to become Atomy’s first Crown Master?
The only secret is my desire to succeed, my firm belief in my journey to success and perseverance that pushed me till I achieved my success. You do not need any capital or knowledge to start Atomy business. You also do not need specialised skills or know-how. What you need to be successful at Atomy is a never-give-up spirit and perseverance. It is also important to attend educational programs such as “Success Academy” and “One Day Seminar” organised by Atomy. Not only these programs serve as a quickest way to gain accurate information about the company and its products, they also serve as a motivating platform. Communication is another important criteria. Network marketing is all about achieving a common goal with people around you. Remember to keep your promises, and prevent any conflict in advance even if it means suffering a loss.

Q. What is Atomy’s unique strength that differentiates itself from its competitors?
Affordable quality products are Atomy’s biggest strength. This makes it easy for the members to sell the products. The reason
why I decided to start Atomy business was because I was confident that I could easily sell the company’s products after using them myself. I did not need to worry about how I was going to explain Atomy. All I needed to say was, “please give it a try as this is a cheap and good product”. The fact that Atomy takes charge of organising various educational programs like Success Academy is also the company’s unique strength. Other unique strengths include its corporate culture that promotes cooperation amongst all its stakeholders, win-win
strategy and the lectures by Dr Lee Sung Yeon, the director of Atomy Economic Research Centre.

Q. Please tell us about the customers’ response to Atomy’s products.
In the beginning, Atomy was given a frosty reception due to people’s low awareness of the brand and the negative associations attached to a network marketing business. Today, most of the response is positive. Many consumers trust and are familiar with the brand. Unlike in the past, no one gives me a cold shoulder when I tell them I am in Atomy business. Most people would instead ask me about how they
can purchase the products or if they can place an order directly with me. As for the basic skincare set, 9 out of 10 customers would make a repeat purchase.

Atomy strictly adheres to its strategy, “delivering absolute quality products at the lowest price possible to its customers”. This also demonstrates the company’s determination to devote its resources and efforts to practising the fundamentals of distribution that is creating the shortest path to connect a supplier with a customer. In many network marketing companies, the members are encouraged and often required to purchase and use the company’s products in to receive compensation in return. Some of these companies have exploited this, resulting in victims and a series of lawsuits. CEO Park Han-Gill thought that a network marketing business that sells high- priced products would fail to serve its purpose. “From the beginning, Atomy has set its competitors as distribution companies such shopping malls, discount stores, road shops and online malls. We looked into ways to provide compensations to our members while setting the price points of our products at heavily discounted levels. We found a way eventually and it revolutionised the the network marketing industry“, recalled CEO Park Han-Gill.

The driving force behind Atomy’s highway success is its members who carried out legwork relentlessly to sell the products. Atomy does not invest heavily in marketing. The viral marketing done by its members has proved successful and just as effective. Atomy is also increasingly becoming a popular business choice in the start-up industry. The business provides full-time workers with an opportunity for a side income while keeping its monthly salary. “In the beginning, network marketing business was considered by many as a repechage stage. People saw it as a platform where the retirees or the unemployed turn to for the last chance to succeed. Today, this has changed. It is not uncommon to see young talents in their 20s and 30s doing a network marketing business. I believe that the entire paradigm of the domestic market can start shifting when just 100 members in their 20s with an yearly sales of more than US$90,000 emerges in Atomy alone. This will serve as a driving force to accelerate the company’s overseas expansion“, said CEO Park Han-Gill. In fact, Atomy is providing fair opportunities to young unemployed, retirees, baby boomers who are planning a retirement to achieve financial freedom. This means the company can become a breakthrough in creating jobs and reducing the domestic unemployment problems.

Photo: CEO Park regularly rides the electronic scooter ‘Ninebot’, a birthday gift he received from his staffs two years ago, around his office.

“Most domestic network marketing companies sell their products only to their members as these companies are an assembly created by people with similar interest - rational consumption. The domestic network marketing industry is experiencing an exponential growth. More people are becoming aware of its legitimacy. We need to create more public platforms in order for network marketing industry to continue to grow”, said Kim Cheon Soo, a Law Professor at Inha University and the writer of a thesis titled “The Growth And The Challenges Of The Korean Network Marketing Industry (2015)”.

Busting Anti-Network Marketing Myths
CEO Park Han-Gill first set up Atomy in a 700 square feet office located at Bongcheon-dong, Gwanak Gu in Seoul. The name Atomy is a combination of the word “Atom”, the smallest constituent unit of ordinary matter and the word for “Beauty”, read as “Mi” in Korean. CEO Park Han-Gill explains that there was another reason behind the name. Back in 2000, he set up an online mall named “iamkorea.com”. The online mall was one of the three internet shopping malls in Korea that sells thousands of different products. “The website sold more
100,000 lifestyle products. It was a huge failure because the business model was too ahead of time. We are talking about an era when PCs were less common”, said CEO Park Han-Gill.

After closing down his online mall, CEO Park Han-Gill saw a news on HemoHIM, the health supplement that can help to boost one’s immunity made by Korea Atomic Energy Research Institute (KAERI). “I called up KAERI immediately and told them I am interested in selling their products. I only thought of obtaining an authorised dealer agreement, as I believed that the demand for a product made by a trusted institute would be high. Ironically, the demand for the product was very low.
CEO Park Han-Gill’s journey to success was not a smooth-sailing one. In the early stage of Atomy business, he could not even register his business due to a bad credit rating. With no extra staff and money to pay for office rental, he bought a small secondhand car and used the space as his office. “Some time later, I borrowed an empty sewing factory to use as my office on terms that stated I would pay for its monthly rental. I still vividly remember how I first hung the company signboard. Making a plastic signboard would cost be $20 and in order to save the money, I used a piece of A4 paper instead. In fact, that paper signboard remained on our office door until the company’s monthly sales reached $446,000”, said CEO Park Han-Gill.

Atomy is a result of CEO Park Han-Gill’s aspiration and years of hard labour. His love for the company is already well known amongst the employees, and is as deep as his knowledge about the business. In Atomy, CEO Park Han-Gill is commonly known as “Assistant Manager Park” due to his immense interest in everything about the company. For instance, “Assistant Manager Park” would display his handmade
animal dolls at the book cafe located at the first floor of Atomy headquarter.

In June 2016, Atomy held a groundbreaking ceremony for its new headquarter and Training Centre. Atomy’s new home, located in Woongjin-dong, Gongju city in South Chungcheong province, consists of 16,000 square metres buildings with two and four-level basements constructed on 33,739 square metres site. Facilities include an auditorium, office spaces, as well as a leisure and sports hub made up of a swimming pool, a bowling alley, basketball and badminton courts, a gym, etc. “ Atomy will change the negative face of network marketing industry. In order for the change to take place, we have to ensure our employee welfare. I believe a healthy corporate culture completes Atomy’s business. We will continue to strive to create the best working environment for our employees”, said CEO Park Han-Gill.
What Atomy Employees Say About Atomy’s Corporate Culture

Atomy has a horizontal organisational structure. The employees decide their own titles for external uses, and holds no title in the office. Due to such corporate culture, the employees are highly encouraged to freely discuss their ideas with everyone in the company. Executing projects before an official briefing about the plans is also a culture unique to Atomy. The employees can decide their own overseas business trips whenever they like. Atomy’s finance department processes and compensates all claims submitted by the employees.

“Atomy’s horizontal organisational structure is well represented in its work promotion methods. Regardless of their positions, staffs from various departments gather to share their ideas to push the project forward. This group brainstorming process significantly increases the company’s chance to develop an innovative idea. Such culture is unique to Atomy, and is almost unheard of in the companies with a vertical organisational structure“, said Mr Lee Jin Wook from Atomy’s Business Support team.

CEO Park Han-Gill emphasises that doing nothing because you are afraid of failure is worse than the failing itself. He introduces this notion as “Chutzpah spirit”. Chutzpah spirit in Hebrew means the quality of audacity that is not bound to formality and authority.

In Atomy’s headquarter, every task is performed on project basis. From a newly-hired to the CEO, a project leader chooses his or her team members, and the team is dismantled once the project ends.

“I once choose CEO Park Han-Gill as a member of my project team. He fully committed himself in the project and carried out the given tasks more diligently than any other team member. I feel that Atomy’s biggest strength lies in its open, nonauthoritative corporate culture. The environment that encourages everyone to freely voice their ideas and opinions without having to worry about pleasing the bosses allows the company to stay ahead of the business innovation game. That is one factor that significantly differentiates Atomy from other companies“, said Ms Choi Da In from the Marketing team.

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