The Fastest growing e-commerce site Coupang has become the biggest success story for a Korean startup in the history of Korea. The six year old startup become so successful that Amazon.com can’t even compete in Korea, and they have no plans of doing so anytime soon. A lot of that has to do with their CEO Bom Kim who has a 19% share in Coupang and is worth over a Billion dollars. He is considered by many to be the most successful Korean entrepreneur of all time.
Coupang is valued at $5 Billion based on their last round of funding from SoftBank. They dominate the Korean market which has over 50 million people. They have been able to keep Amazon out which is not easy since Amazon is considered one of the top e-commerce sites in the world. Coupang’s business model is very simple, they focus on on-demand commerce. When you go around Seoul you will see plenty of Coupang trucks making deliveries all over Seoul. Their same day delivery service provides customers with instant gratification. This is something Amazon really can’t compete with because they just don’t have the infrastructure in place in Korea and to set that up would be extremely costly. How can you compete with same day delivery? This is why Amazon is heavily investing in drone technology. To get that delivery time down from a same day to a matter of hours.
This whole delivery on demand concept that Kim has come up with has crushed all competition and has no fear, even against Amazon. Seoul is the perfect setup for e-commerce. Their high speed internet connection and dense population makes Coupang the perfect site to dominate. While Amazon was busy trying to corner the market in China and Japan, Kim was able to quickly start Coupang with his media business background.
“I knew I wanted to start something in commerce [in Korea],” says Kim
He wanted to follow Groupon’s daily model which was a big hit at the time. Many Korean startups tried to follow this model and Coupang was not the first. However Kim was able to spend a lot on ads ($1 million) using Facebook. Now Koreans that were on Facebook were able to know the brand Coupang within a matter of months. Now that Coupang was a brand name, Kim decided to go away from Groupon’s daily deal model and focus more on inventory with the aim to get items that are used on a regular basis like diapers, bottled waters, rice, and toilet papers. They then were able to get funding from Sequoia Capital and Black Rock for $400 million.
They recently got a $1 billion from SoftBank which will improve their already fast same day delivery service which already has over 3,500 “Rocket” delivery drivers. This means for Amazon to break through they will have to spend over $1.4 billion as well as put in 3 plus years of marketing in Korea. Something many feel they will not do.
Coupang is not really known for their prices but rather their quick delivery as well as friendly service.
Bom Kim was able to bring in talent from Silicon Valley as well as programmers, engineers, and translators from outside of Korea to help in building the best commerce startup. He was able to bring the inventory sales of Coupang up to $1.5 billion in 5 years. Now granted Coupang is not making money at the money as their cost per year is high and margins low, but they will continue to get funding because they are the most dominant e-commerce market in Korea. Same thing happened with Bezzos at Amazon, which lost money for years and years but still managed to stay alive because of their market presence. For now Coupang will continue to dominate Korea with no reason to expand outside of Korea.