Hello, fellow Amorepacific members. The persistent monsoon and typhoon have passed, followed by a crisp cool breeze. Although we're not completely out of the woods, I hope we can each find ways to enjoy the new autumn season safely.

My last column talked about the 'customer experience journey cycle', where the shopping & service experience continues to consumption experience, which then builds reputation and leads to a new follow-up consumption experience. I hope you remember the points my last column touched on as we think about the kind of brand we can become and what experience it will offer by looking at a few companies and brands that are well known for their customer experience.

The first company I'd like to introduce is the father of ecommerce and platform business, Amazon. I'm sure a lot of you have already seen different analysis of the company, but I'd like to focus on how Amazon came to become what it is today by innovating customer experience, so pay close attention.

Many tend to think of Amazon as an ecommerce platform. In fact, it is more accurate to think of it as a 'tech company'. A tech company solves customers' problems that existed in the previous market frame through the use of technology. This is what Amazon did. The company began as an online bookstore to resolve the inconvenient customer experience of having to go to store after store to find the right book or having to stand in line to buy one. And based on its success as an online bookstore, Amazon expanded to other product categories and became the largest ecommerce company today. I'd like to discuss Amazon's first technology that was the foundation of its success – the '1-Click' service.

Online shopping was not as convenient as it is today from the start. In the early days (the 1990s), consumers had to enter information, including address, contact info, and credit card number, every time they purchased something online. Out of the entire shopping experience online, the ordering and purchasing process was the most inconvenient. Amazon's 1-Click service allowed customers to make a purchase with the payment information needed to complete the purchase having been entered previously. Customers placed orders with one simple click without any additional process, which made the shopping experience much more pleasant than at any other platforms. This has now become a service taken for granted but considering Amazon filed the 1-Click patent in 1997, CEO Jeff Bezos had an amazing insight. (We had Chollian in the 1990s, guys…)
Other companies knew that this service was incredibly convenient but were able to introduce the service only by paying Amazon royalties until 2017 when the patent expired.

Amazon introduced its 1-Click system to resolve the inconvenience of ordering online and brought down the psychological barrier of online shopping and then solved the inconvenience in customer experience of the long delivery time, the biggest disadvantage to online shopping in the US, with 'Amazon Prime' in 2005.

Amazon Prime is a service that guarantees free shipping within two days wherever in the US for customers who pay a membership fee. At the time, Amazon management was opposed to the idea thinking that the accumulated delivery expenses will significantly exceed membership fees. CEO Jeff Bezos, however, pushed ahead with Amazon Prime arguing that the 8-dollar delivery cost will not accumulate proportionally, and that logistics cost will drop as more and more customers use Amazon, generating profits in the long term. So, how did Amazon Prime turn out?

Compared to Amazon's general consumer who spends an average of $600 a year, Amazon Prime members spent $1,300 (in 2017) and once a member is locked in, they show strong loyalty. Statistics show that 60% of US households are Prime members. Amazon Prime is the number one driver of the company's sales.

I mentioned before that Amazon is a tech company that solves customers' inconveniences. The best example of this fact is Alexa, which was developed in 2004. As you know, Alexa is a virtual assistant AI technology based on decades of customer data. Information we seek daily, reservations to make and shopping to do… They can be fun, but these tasks also take up much of our valuable time. We've all thought from time to time how convenient it would be to have a personal assistant. Now, that experience is possible with Alexa.

The current Alexa can take care of many daily tasks like checking the weather, controlling the smart home environment, and calling or texting someone. It has yet to reach the technology level to provide the shopping experience that is the ultimate goal of Amazon. Still, Amazon continues to work on Alexa. The reason is – like 1-Click and Prime – Alexa doesn't generate profits directly but is expected to accelerate the growth of retail. Remember I explained Prime members spend $1,300 a year on Amazon, significantly exceeding the spending of the ordinary customer? Now, customers who use Alexa spend $1,700 a year. This is the part where it becomes clear why Amazon obsessively pursues to innovate customer experience through technology.

Other than the three services mentioned above, Amazon is pursuing various initiatives to improve customer experience by resolving the various inconveniences in the market. It is recently working on resolving the inconveniences of offline shopping payment with 'Amazon Go' like it resolved the inconveniences of online shopping payment with 1-Click. It is introducing drones to enable faster deliveries than Prime. In fact, there is not enough space in this column to write out all the effort Amazon is making.

Notable and outstanding customer experience examples are not all far away. The second brand I'd like to introduce is a Korean luxury eyewear brand, 'Gentle Monster'. If Amazon is a large company improving the quality of customer experience by focusing on resolving customers' inconveniences using digital technologies, Gentle Monster is a brand that focuses on satisfying the 'new physical experience' of customers.

Eyewear is a product that requires customers to visit a store to try them out. So, the general optical store we see every day displays as much products as possible for customers to try them on. The method of display is the same at luxury eyewear stores. Even the biggest brands do not have their own eyewear store and department stores also display as much products as possible with the least amount of advertising materials. Fashion stores of the same brand offer amazing space experience that delights customers, while their eyewear stores seem small and humble. Gentle Monster, on the other hand, offers an amazing space experience that does not lag behind any other luxury brands or cool display.

Gentle Monster has about 40 employees working on VM planning out of the total of 150 back office employees (as of 2017). It is the highest ratio among brands I know. There is no more need to explain what experience Gentle Monster focuses on.

We make time and pay money to go enjoy works of art. Gentle Monster's showroom is praised to have exceeded the level of commercial art. It is worth making time to visit the showroom. Right now, at this moment of writing this column, the number of Instagram posts with Gentle Monster tag is 255,000. This speaks to the brand's target customer – the MZ generation who seek Instagrammable spots. And considering that the brand records above 20% in operating margin every year, this new and surprising space experience strategy seems to be successful.

Do you remember this image?

The picture was taken in May this year of customers running towards the Chanel store as soon as the department store opened before the brand increased its prices. The price increase would make items more expensive, sometimes up by millions of KRW. Customers stood in lines overnight to buy items before the price increase. Seeing the brand receive so much love from customers shows how Chanel is the ideal model of all brands.

Frankly, high-end luxury brands like Chanel, Hermès, and Rolex are famous for being far from friendly in terms of customer service at their stores. How did they become brands customers desire despite their customer experience? The secret lies in the incomparable product experience.

When you think about it, humans always consume something. You, too, are probably using something right at this moment as well. Today, we live in an era where we can boast the things we eat, enjoy and use on social media. But to make those pictures more stylish, it requires a bit of editing. And no one can carry around a refrigerator just to show off. Fashion items are special, though. Because these items are always on us, they show style and the person's wealth and status without having to explain in words. I'm sure not a lot of people reading this column would look at the above pictures and ask, 'what brand is that?'

Legendary luxury pieces in the pictures above offer an amazing level of satisfaction to the owner, and therefore, share the below similarities other than the fact that many people desire them.

1. They are never in stock.
2. There is no waiting list, or if there is one, there's no way to know when you'll get the item.

Is it because the supply can't meet the huge demand? That's true to a certain degree, but it is also the brands' strategy to limit the people who can own these high-end luxury items to ensure scarcity. To get a Hermès Birkin, one has to build a relationship with a seller for a long time (or in other words pass the requirements) and buy entry items like clothes and jewelry first. Hermès is a little extreme, but it is also almost impossible to get the item you want at Chanel or Rolex. These highly desirable items share the below similarities.

3. They are highly cashable.
4. They are more expensively traded outside the stores.
5. Their value grows with time.

Hermès Kelly and Birkin bags are so impossible to buy that you may get them if you go to a professional reseller… Of course, you have to pay a premium of millions of KRW and may even be refunded after waiting and waiting because they are hard to get. Rolex watches are even categorized as assets, not products, because their value grows with time.

All companies dream of having these legendary products. How did these brands create these incomparable, legendary products? Legends require scarcity as well as a dramatic and long brand history and the consistency in protecting that value.

The founder of Hermès was a manufacturer of house harnesses for the royal family and nobility since the 19th century. Even at the time, people said 'a horse wearing a harness made by Hermès is more stylish than the owner of the horse'. His outstanding quality made his products luxury items then, and the brand continues to preserve and protect that value consistently without damaging its heritage.

It goes the same for Chanel. Coco Chanel, who made womenswear practical and liberated women from corsets, is a hero of a historic story and considered an icon for liberating women. And unlike some small-and-mid-sized luxury brands (?) that failed once or twice, Chanel has a consistency of never wavering brand value. I'm sure you know that there are so many brands that appear and disappear every day and how difficult it is to maintain a brand's value. I can only assume that she had an insight into the future and a steel-like commitment.

Over the past few years, the retail market changed rapidly. The online market continues to achieve rapid growth and the power of consumption has shifted toward the MZ generation. To respond, the luxury brands mentioned above are also changing.

Considering the typical age of customers who traditionally owned and enjoyed luxury items, the Chanel Game Center pop-up and Rouge Hermès one can experience at the price of KRW 80,000 are probably the most refreshing change in the long history of the two brands. Their effort to meet the changes of times, while some brands quickly failed in the recent few years by insisting on staying the same and drunk on their fame of the past, seems like courageous attempts to protecting their value.

Today's slightly longer column introduced companies and brands known as killers in their respective fields in terms of customer experience. They may feel like far-away brands because they are brands that are leaving such a big footprint, but Amorepacific too is a historic brand with 75 years of history. I invite you to think about how we can become a brand that offers amazing experience to our customers by gaining insights from the cases in this column despite the challenging times we face.