Coupang is the second-largest South Korean eCommerce platform, after Gmarket, and it’s been compared to Amazon due to its rapid growth and lightning-fast delivery.
The company is currently trying to enter the American stock market.
And even though it is mainly focusing on the Korean market, it seems that this is a marketplace we should watch out for.
In this article, we’ll give you a general overview of everything you need to know about Coupang.
What is Coupang?
Coupang has become one of the largest ecommerce companies in the world. It has grown exponentially in the last couple years without any sign of stopping soon.
The platform has gained popularity thanks to its creative approach and innovative technologies applied to mobile ecommerce and customer service. It’s fair to say that the company has set new standards for online shopping in Korea.
Coupang currently offers its Korean audience one of the most revolutionary door-to-door services in the world, which is supported by its exclusive technology.
They actually implement innovative technologies in almost everything. From big data to logistics, all aimed at improving the buyers’ shopping experience.
The MIT Technology Review and Forbes magazine have ranked Coupang as one of the 50 smartest companies in the world.
Only nine other companies including Tesla Motors, Google, Facebook, Amazon, and Coupang are mentioned in both lists.
Coupang’s Fast Delivery
One of the factors that has put Coupang among the shoppers’ favorites is their speed.
The company has warehouses strategically located in such way that they claim that 70% of all Korean population are about seven miles from one of their over 100 fulfillment centers, according to the company’s S-1.
Coupang also stated that 99.3% of the orders received are delivered within 24 hours of purchase. – CNBC
In 2019, the company introduced one of the biggest reasons for its quick growth: Dawn Delivery. This means that customers that make a purchase before midnight have delivery by 7 a.m. guaranteed.
Amazon has not been able to match that speed yet.
Coupang was founded in 2010, and it started as something similar to Groupon for South Korean customers.
It then expanded to become an eCommerce marketplace, able to topple the competition in the country within its first three years.
By 2014, the company had quickly raised $300 million, largely from U.S. investors and in 2015 and 2018, they were able to raise $3 billion from SoftBank.
That way, in eleven years, Coupang was able to grow into the 50,000-employee business that it is today.
Nowadays, Coupang is one of the dominant forces of ecommerce in the South Korean market, in big part due to its commitment with ridiculously fast delivery speeds.
The founder of the company, Bom Kim, has invested his efforts into delivery efficiency. He talks about eCommerce as a matter that “boils down to minutes and seconds.”
Philip Lee, a researcher of the South Korean tech world, mentions that it is thanks to the expectations Coupang has set for customers that logistics have started to change.
Why you should know about Coupang
The so-called Amazon of South Korea went public on the American stock exchange seeking a $50 billion valuation.
The company had been on a roll before that with their revenues nearly doubling in 2020.
This meant a 91% jump, which means around $12 billion. This is what happened:
- The Seoul-based Amazon of South Korea joined the New York Stock Exchange under the ticker “CPNG.”
- Coupang raised $4.55 billion and has been valued at about $60 billion.
- The company became the biggest IPO by an Asian company in the U.S. since the record $25 billion by the Alibaba Group back in 2014.
This is how Coupang has become the largest initial public offering this year.
The company debuted with a $35 stock price and was able to get an initial $60 billion valuation, $10 billion more from what they had originally pursued.
This initial public offering has settled their status as a competitor of the size of Amazon and Alibaba.
Critiques about Coupang
Coupang’s success has faced scrutiny related to the lengths they go to keep their delivery times as low as possible, resulting in poor working conditions.
This claim is backed by local labor advocates and politicians.
Rest of World reported last fall that the company had “a business ethic that prioritizes rapid delivery over employee safety.”
Coupang vs Amazon
- Customer Base: Coupang claims to have around 15 million active customers, according to its most recent filing. If we compare it to Amazon, Coupang’s marketplace seems to be much smaller.
- Market Saturation: Amazon and Coupang still have different market saturations. Coupang claims that at least 200,000 third-party sellers are signed up to sell on their platform. And although it is one of the dominant e-commerce companies in Korea, it captures only 24.6% of the e-commerce market as per the numbers reported in April 2020.
- Memberships: Something Amazon and Coupang have in common is that they come to heavily rely on its membership system. At Coupang, thirty-two percent of customers currently pay for the Coupang Wow Rocket Membership, which would be the company’s equivalent of Amazon Prime.
- Private Labels: Coupang has recently expanded its private-label lines in the apparel, beauty and electronics areas. Their overall sales margins tend to be a little thinner because of its low cost of delivery, so Coupang is making a bet on the value of first-party products, similar to Amazon’s strategy.
- Online Groceries. Coupang’s speed of deliveries combined with the amount and location of its many warehouses has helped the company break into online grocery much faster than Amazon.
It is fair to point out that comparing Amazon and Coupang is not only about similarities, it is also important to consider the environment.
For example, Coupang has become such an eCommerce giant in the South Korean market because of the particularities of their customers.
South Koreans tend to be more receptive to ecommerce companies.
Remember that this is one of the most populated countries in the world!
It also has a high rate of mobile and internet adaption with eighty percent of Koreans living in cities with internet access, and 95% of Korean buyers that own a smartphone.
These numbers are well above the U.S. proportion of 80%.
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Where is Coupang headed next?
Just like Amazon, Coupang is already starting to expand and become something more than just an e-commerce business.
For example, in December they launched a new video-streaming service called Coupang Play, which is equivalent to Amazon Prime Video. Also, the company has been mentioning plans to launch a livestream shopping business.
Coupang used to rely on a group of subcontractors to be able to ship and deliver their orders, but in January this year, the company also launched Coupang Logistics, thus bringing its wide fulfillment network in-house.
The South-Korean eComemrce giant is now able to handle all their deliveries and is not limited to a single industry either.
Which is why they launched Coupang Media Group; an in-house advertising platform very similar to the growing retail ads businesses of Amazon and Walmart.
The company is also currently working on Coupang Pay internally and they also have a food delivery service called Coupang Eats.
Although Coupang is making great efforts to continue growing as a business, there hasn’t been much expansion in other countries, but this might be just a matter of time.
Source: Modern Retail
What about Amazon in the Korean Market?
Coupang might be making all these efforts to be a groundbreaking ecommerce player in Korea.
This is, in huge part, thanks to Amazon’s expansion, partnering up with local e-commerce player 11st (also known as 11 Street), as reported by The Korea Herald.
Korean shoppers will now be able to buy tens of millions of products directly from the latter platform.
In response, Amazon introduced Amazon Global in 12 other markets.
Their current partnership with 11st includes a selection that spans over 30 categories, including fashion and electronics.
11st is owned by the mobile carrier giant SK Telecom and this deal with Amazon may mean a boost in Korea’s competitive e-commerce market.
It is true that Amazon will have to face tough local competitors like Coupang, Naver and Shinsegae Group, which acquired eBay’s Korean business for $3 billion in June this year.
It’s very obvious that Coupang’s focus on meeting customer expectations and optimizing logistics have rightfully earned them the nickname of The Amazon of Korea.
However, there are still limitations like the language barrier and market saturation that the company will have to overcome, now that Amazon will become a player in the Korean market.