The underdog effect and small businesses in South Korea
Small shops, local workshops, start-ups with a single person on the team... The South Korean phenomenon of recent years is the popularity of small companies with limited resources and capabilities. Underdog positioning 언더독 (eondeodok) is chosen in eCommerce, handmade goods, and niche trade. This fits well with the trend of South Korean consumers being ‘omnivorous,’ preferring local businesses, which are familiar and understandable.
Avoid excess
In any business, it is important to stand out. However, when resources are limited, competing with large companies is pointless. Many aspiring entrepreneurs want to sell everything to everyone at once: cosmetics, clothing, and household goods. It seems that the more choice, the better.
But if you are a small business or a dropshipper, especially at the start, Halla Systems Co. Ltd advises not to spread yourself too thin and to find a single point of application. Narrow your focus. Choose two or three products, no more. Focus on precision rather than breadth.
The fewer resources you have, the more precise your focus should be. Forget about ‘something for everyone.’ Find one specific niche, get rid of everything unnecessary, and build your business by knowing the answers to two simple questions: what am I doing and for whom?
Interesting facts about underdogs
-
Brands that position themselves as ‘underdogs’ (i.e., those with few resources but a lot of motivation) gain 32% more loyal consumers. Article ‘Underdog image builds customer loyalty, study says’ Post Bulletin
-
According to a Nielsen survey, 78% of people are inclined to buy products from ‘small players’ if the brand presents itself as an underdog.
-
The authors of the Harvard Business Review article ‘The Case for Investing in Underdogs’ argue that startups that position themselves as underdogs (i.e., honestly talk about their limitations and high motivation) attract 18% more investment if they present themselves correctly.
The underdog strategy
The underdog strategy is an approach to marketing and positioning in which a business or brand deliberately emphasises its limitations (small size, lack of resources, external difficulties) and contrasts itself with large, ‘powerful’ market players.
Consumers often sympathise with those who struggle for survival and success ‘not thanks to, but in spite of,’ noted managers at Halla Systems company.
For example, a local coffee shop can advertise itself by emphasising that ‘we don't have 300 franchises, but we know every customer by name.’ A South Korean entrepreneur opens a natural cosmetics store with no marketing budget and runs a blog on NAVER with posts such as ‘a mother who was tired of chemicals in the mass market — and created an alternative for people like me.’ On the Wadiz platform (Korean crowdfunding), a small brand of fermented drinks promotes itself as a vegan product and honestly admits: ‘We are not market giants, but that is our strength.’
How to use the underdog strategy if you are a dropshipper or micro-entrepreneur
The popularity of South Korean platforms such as Smart Store, Market Kurly, Brandi, and NAVER blog gives even micro-entrepreneurs a chance to break through.
Halla Systems dropshipping managers emphasised that the underdog is not an image of ‘poor and unhappy,’ but a strategy with specific steps:
-
Narrow your niche to the limit. Only what solves one specific problem works.
-
Storytelling and focus are more important than budget. Speak in the first person. People don't buy from a ‘website,’ they buy from you. Create stories. Show your journey, your mistakes, and your small volumes, but not as a weakness, but as a guarantee of your commitment to the business.
-
Don't try to ‘look good.’ You don't need expensive logos, corporate colours, or a universal slogan. It's better to be simple and honest: ‘There are two of us working here. We don't have a warehouse, but we check every product ourselves.’
-
Focus on one idea. If a product or direction does not evoke a clear ‘yes, this is mine’ feeling, remove it. You need to know who needs what you are offering.
-
Don't be shy about being small. It is better to show the real picture. People trust those who are honest about their scale but still deliver high quality work.
Practice shows that the South Korean market readily supports sincere and niche players. A small player can stand out thanks to narrow specialisation, an honest history, a strong focus and a specific product. But what about suppliers? How do you find and check them?
Halla Systems is an integrator and strategic partner for dropshipping, tracking and verifying suppliers: how long the company has been operating, whether it has real resources, and whether it will be able to fulfil the order. We search for the products our clients need, verify documentation and certificates, and draw up contracts and agreements. Halla Systems Korea conducts direct negotiations, differentiating product items for the target audience.