Coupang, a startup founded by a high school dropout from Harvard Business School, helped transform e-commerce in South Korea, one of the world’s leading fastest growing markets for online -Shopping

SEOUL, South Korea – The little white vans drive the streets of South Korea The uniformed workers send photos of safely delivered packages to impatient customers The workers can move as fast as the employer promises the service is called “missile delivery” ”

The trucks and operations are owned by Coupang, a start-up founded by a Harvard Business School dropout that rocked shopping in South Korea, an industry long dominated by giant button-down conglomerates a country where people are obsessed with “ppalli ppalli” or get things done quickly, Coupang has become a household name by offering next-day and even same-day and dawn grocery delivery and millions of other items at no extra charge

The company, sometimes referred to as the Amazon in South Korea, received huge backing from Wall Street Thursday, with shares rising 41 percent from a market price of $ 35 to $ 4925 The iPÖ collected $ 4.6 billion and valued the company at around $ 85 billion, the second largest American balance sheet for an Asian company after the Alibaba Group of China in 2014

Coupang may need the money South Korea’s large conglomerates called chaebol and others are building their own delivery networks as Coupang plans to expand.There are other issues as well, such as growing concerns about working conditions after the deaths of several warehouse and delivery workers in Coupang, who blamed some relatives and labor activists for overwork and bad labor practices

Currently, Coupang is South Korea’s largest e-commerce retailer Its status is further cemented by people stuck at home during the pandemic and people in the country craving for faster delivery

“I’m not going to go so far as to say that I can’t live without Coupang because there are so many other online shopping opportunities here that are fiercely competitive and some of them can be as fast as Coupang or cheaper,” said Kim Su-kyeong, Coupang shopper and mom in Seoul “But Coupang is so branded that the name comes to mind when I think of shopping online””

As Bom Suk Kim, who founded Coupang in 2010, likes to say: “Our mission is to create a world where customers ask themselves,” How have I ever lived without Coupang? “

Mr 42-year-old Kim ran an unofficial and short-lived Harvard alumni magazine in the United States before returning to his native land to revolutionize the e-commerce industry Coupang’s rapid growth was fueled by a combination of daring entrepreneurship and branding This includes heavy spending on infrastructure to limit the inconvenience typically associated with online orders and returns such as cardboard boxes. Customers who are part of the Rocket Wow membership program can return a Coupang product by presenting it with no box or return label leave the door standing

“Not only is it free – it’s a stress-free experience,” said Mr Kim said in an interview on Thursday, “We really tried to get to the extremes that have a really high bar, not to do something incrementally different, but to think about how we can just change the actual framework – the framework””

The company’s name is a mixture of the English word “coupon” and “pang”, the Korean sound for reaching the jackpot In an industry where most delivery workers drive around in nondescript trucks with drab jackets, Coupang carries a fleet of full-time drivers – known as Coupang Men but recently renamed Coupang Friends – brightly colored uniforms and driving around in branded vehicles exhibited by companies

“Coupang has grown rapidly by meeting two key customer needs: affordable prices and fast delivery,” said Ju Yoon-hwang, professor of sales management at Jangan University. “Coupang also offers more goods than its competitors, so consumers will believe to find everything on Coupang ”

Few startups – like Naver, South Korea’s dominant web portal and search engine, and Kakao, the premier messaging app and online bank – have been as successful as Coupang.But Naver and Kakao are both listed in South Korea Mr Kim brought up Coupang Wall Street to attract bigger investors and a higher valuation that would allow his company to outperform its home rivals

South Korea is one of the fastest growing e-commerce markets in the world and is expected to be the third largest in the world this year, after only China and the U.S. According to Euromonitor International, a market research firm, the volume will be that last year was valued at $ 128 billion, expected to reach $ 206 billion by 2024

And it’s ideal for e-commerce Rural 52 million people, the vast majority of them in densely populated cities. Almost every home has high-speed internet, and people pay taxes and gas bills with smartphones

South Korea had a vibrant delivery culture long before the arrival of e-commerce. Families telephoned to deliver their food around the clock. Dry cleaning workers climbed stairs in residential buildings to deliver freshly pressed clothes. Motorcycle couriers brought documents and flowers and so on from one district to another

Coupang’s first competitors were eBay-style marketplaces where customers found sellers. Deliveries were made by logistics companies that had contracts with independent couriers. Deliveries can take several days

When Coupang started its “rocket delivery service” in 2014, it sparked a price and delivery war. Since then, the company has built up its own network of logistics centers 70 percent of the population live within a seven-mile radius of a Coupang fulfillment center, according to the company.The company uses machine learning to predict demand and store goods in warehouses.It also operates its own fleet of 15000 full-time coupang friend couriers

In 2020 the company doubled its workforce to 50000, making it South Korea’s third largest employer in the private sector000 more jobs will be created

Analysts said Coupang borrowed from Amazon’s playbook by trying to become a dominant market power before turning a profit. The company’s revenue nearly doubled to $ 12 billion last year However, huge investments in the logistics network, made possible by funding from foreign investors such as Japan’s SoftBank and Vision Fund, have remained in the red, with annual net loss rising to $ 1 billion in 2018, before rising to 475 last year Million dollars decreased

“The picture is pretty clear about the strength of the business,” said Mr Kim said, although the company has not given a timeline for when it could turn a profit, he said Coupang will “continue to be able to finance itself” and “be aggressive about reinvestments” ”

Recently, Coupang Eats, a food delivery service, and Coupang Play, a video streaming app, were launched.However, unlike Amazon, Coupang doesn’t have other companies like cloud computing that can easily generate the money needed for big expansions And rivals are tough

Some of the chaebol, the family-run conglomerates that dominate the economy, are expanding their e-commerce businesses, particularly Lotte and Shinsegae, who run the country’s largest department store and shopping mall chains, as does Naver, who is already an e-commerce company -Giant is

As competition intensifies, super-fast delivery is quickly becoming the new norm, which weakens the novelty of the Coupang missile delivery service

Coupang has also been subjected to a review of its labor practices. Former Coupang workers and labor activists accuse the company of exploiting its warehouse workers in its frenzied rush to process orders as quickly as possible

As the number of workers doubled, the number of people suffering from work-related injuries or illnesses in Coupang and its camps rose from 515 in 2019 to 982 in 2020, according to government figures

“Coupang is an inhumane company that treats its workers like slaves or machine parts and squeezes them to the last drop,” said Park Mi-sook, whose son Jang Deok-joon died briefly of a heart attack in October after returning from home on a night shift at a Coupang warehouse His death was deemed a work-related incident, and Coupang has since apologized

Coupang has denied abusing its workers in the past year alone, the company invested $ 443 million in automating its warehouses, and the number of warehouse workers rose 78 percent to 28400 increased to increase the efficiency of its employees and reduce the workload

“What made Coupang’s missile delivery possible was its massive employment and investment,” the company said in a statement

In a letter to prospective investors, Mr. Kim presented an example of a typical Coupang shopper: a working mother who realizes late at night that she forgot to go shopping and then placed an order online through Coupang gives up

“When she opens her eyes, it’s like Christmas morning,” said Mr Kim wrote, “The order is waiting at your doorstep”

Coupang

World News – US – South Korea’s answer to Amazon debuts on Wall Street

Source: https://www.nytimes.com/2021/03/11/business/korea-coupang-ipo.html