Earlier in April, South Korea’s e-commerce giant announced that it is entering the Singapore market, which marks its first overseas foray throughout its 11 years of operation.
Coupang has apparently been seeking ways to enter Singapore since last July when it acquired Singtel’s video streaming service provider Hooq Digital Ltd.
The Korean Economic Daily reported that the company has started hiring rounds for its Singapore entity since March.
On Glassdoor, it is looking for Head of Operations, Head of Logistics and Head of Retail, in addition to other positions like Senior UX Designer, Business Analyst (for Coupang Play), and Principal Quality Assurance Engineer.
Its entry to Singapore will definitely shake up the local e-commerce landscape, which is currently dominated by Tencent-backed Shopee, Alibaba-backed Lazada, and Qoo10.
This article explores the founding story of Coupang and how it rose to become South Korea’s most popular online retailer.
Who is Coupang?
Kim Bom started Coupang back in 2010 after dropping out of Harvard Business School after a year.
“I knew I wanted to start something in commerce (in Korea),” he told Forbes in a 2016 interview.
Coupang first started out as a Groupon-style daily deals business, before evolving to be a third-party online marketplace in 2013, which was much like eBay.
It listed third-party inventory from local suppliers, offering fast delivery, low prices, and a “wow” customer experience.
This model was a success. Within three years, the platform crossed US$1 billion in sales and turned profitable.
One key factor that propelled Coupang’s popularity is its fast delivery options, which is powered by its own 24-hour logistics business called Rocket Delivery.
Shoppers can choose from millions of products, ranging from fresh produce to electronics, and opt for overnight or same-day delivery.
In 2019, Coupang further accelerated delivery speeds with the launch of Dawn Delivery, which promises to deliver by 7am for orders placed by midnight the day before.
The company has committed billions to build and strengthen its logistics infrastructure, which includes warehouses, fleets of trucks, and thousands of delivery drivers known as “Coupangmen”.
He believes that when customers get used to fast delivery speeds, they will order more over time, translating to increased sales.
We can’t bend the customers to what we want, but we can bend ourselves to what the customers want.
– Kim Bom, founder of Coupang in a Forbes interview in 2016
According to Coupang, 70 per cent of Koreans live within 10 minutes of a Coupang logistics centre, bridging the gap of last-mile delivery.
It also hired its own delivery employees, putting them through training and aligning incentives with the company’s values.
Through vertical integration of fulfilment and delivery, Coupang was not only able to deliver faster than competitors, but also control the experience of their customers, thus increasing customer satisfaction significantly.
Kim believes that the level of detail is what has helped set his business apart in an exceedingly competitive market. While Amazon is not active in South Korea, Coupang outranked local names such as Gmarket and 11Street to be named the consumers’ preferred online retailer in 2019.
Coupang said that its logistics investments have paid off as 99.3 per cent of orders placed on its site are delivered within one day. Coupang now delivers 3.3 million items each day, up from an average of 2.2 million units per day at the end of 2019.
It added that more than half of all Koreans have downloaded the Coupang app.
Coupang has definitely grown by cutting prices and speeding up deliveries, earning itself the name “Amazon of South Korea”. Last year, Coupang also ranked second on CNBC’s 2020 Disruptor 50 list of the world’s most innovative companies.
Beyond e-commerce, it delivers prepared foods through the name Coupang Eats and offers video streaming under the label Coupang Play.
Covid-19 propelled an e-commerce boom
Coupang has weathered its fair share of challenges due to the coronavirus pandemic.
While they were asked to stay home, millions of South Koreans turned to online shopping more than before to order essentials like face masks and hand sanitizer.
In January last year, Coupang was hit with a wave of disruptions to its supply chain, prices and logistics capacity, fuelled by widespread panic buying. On top of that, it faced an outbreak of coronavirus cases at a warehouse near Seoul, fuelling concerns that it failed to enact adequate safety measures.
Coupang maintains it provided workers with gloves and masks every day, disinfected facilities, as well as implemented temperature checks and “testing and tracing protocols.”
The company quickly managed the deluge of orders and not only maintained service levels, but also improved them in some areas, Coupang said.
As order volume surged, it expanded overnight and same-day delivery to more items, like consumables and fresh food. The company also opened a new logistics center in March 2020, which increased its capacity to fulfil orders.
Coupang’s growth accelerated throughout 2020, from 79 per cent year-over-year in the first quarter to 100 per cent in the fourth.
According to Reuters, Coupang’s daily deliveries spiked from 2.2 million per day in late 2019 to 3 million per day in mid-February 2020.
Coupang goes public, now valued at over US$60B
Over the last decade, Kim has raised US$3.8 billion in funding from a slew of Silicon Valley venture capital firms including SoftBank, Sequoia Capital, and BlackRock.
At the back of Coupang’s strong growth, investors had told Kim to take the company public but he felt that it wasn’t the right time.
We had to be honest with ourselves and say once you go public, it’s much harder, at least in the near-term, to pivot or to really change your direction.
We had to ask ourselves: ’Was the platform we had built, were the services and experiences that we were providing for our customers, creating a five per cent difference or were we creating that kind of world where the customers we love, their jaws would drop?’ And the reality was no.
– Kim Bom, founder of Coupang in CNBC’s Make It interview
So he scrapped the IPO idea and decided to transform Coupang into an end-to-end e-commerce platform. He felt that a massive change was necessary in order to provide something that really mattered to customers.
“We had to change our entire technology stack, the way we did business, our business model. I think that was the most difficult, but the choice that I’m most proud of,” said Kim.
That decision eventually paid off. In 2018, SoftBank invested US$2 billion in Coupang, giving it a valuation of US$9 billion, which made it South Korea’s most valuable startup.
The following year, it racked up sales of over US$10 billion, with a 60 per cent year-on-year growth.
Coupang finally went public in a US$4.6 billion IPO in March on the New York Stock Exchange. It is touted as South Korea’s most valuable startup as its market capitalisation is now at about US$67 billion, although it briefly exceeded a market value of US$100 billion.
Kim also saw his net worth soar more than sixfold after the IPO to US$6.4 billion, making him the biggest gainer on this year’s Korea Rich List.
Coupang’s IPO was the largest U.S. listing by a foreign company since Alibaba’s debut in 2014.
Kim has stepped down amid backlash
Despite the company’s popularity, it has faced scrutiny after reports of several deaths among delivery and logistics employees who were allegedly overworked.
Coupang is now facing a wave of consumer boycotts over its handling of a fire that killed one person and destroyed its biggest logistics centre.
More than 7,000 people have joined public petitions on South Korea’s presidential office website calling for Coupang executives, including US-based Kim, to be held accountable over workplace safety and labour practices.
On June 17, Kim resigned as the chairman of the board and as a registered director of Coupang Corp. The company reasoned that Kim’s resignation was because he wants “to be committed to global management following the listing on the New York Stock Exchange.”
Kim remains the CEO and board chairman of Coupang Inc. Moving forward, he said that he will concentrate on the company’s overseas businesses.
Today, Coupang has offices in Beijing, Los Angeles, Seattle and Singapore and Silicon Valley, in addition to its Seoul headquarters.
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Featured Image Credit: Coupang