Coupang is one company I regretted not getting the chance to visit on my recent trip to South Korea. Started by Harvard grad and Harvard Business School drop-out Bom Kim, the ecommerce site is on track to bring in more than $700 million in revenue this year.
A lot of people I met in Seoul gushed about the story of Ticket Monster, a daily deals site that sold to Living Social for upwards of $100 million. Ticket Monster beat Coupang to the market, but it trailed the recent arrival in one important sense: the sale of products. Coupang, which has 12 million registered users, is also much larger than Ticket Monster.
Update: A Ticket Monster representative got in touch to point out this is not the case. According to Dealtable.co.kr, Ticket Monster has a market share of 41 percent, compared to Coupang’s 37 percent. I apologize for the error.
Update 2: Coupang’s people have now reached out and pointed to reports from Coocha.co.kr and Nielsen that show Coupang with greater market share and more page views. Looks like, as ever, it depends on how you count it – and who counts it.
Kim arrived in Seoul in June 2010 with two suitcases, some investor funding, and an idea to start a Groupon-like service for Korea. He had left business school after a year so he could do the startup. Two months later, he launched a Web site, designed by an engineer from Korea’s leading search portal Naver in his spare time. Initially, Coupang focused squarely on services, just like Groupon. But Kim, who was born in Korea but left for the US with his parents as a child, quickly realized there was a huge opportunity in selling physical goods.
He soon turned the company from a straight Groupon clone into an operation that was very focused on customer service. “There are not a lot of competitors here in Korea that are very customer focused,” Kim told me on a Skype call today.
He invested in sales staff and call centers – which remain open every day of the year – and learned a lesson from Walmart’s failure in the country. Walmart was beaten out by a local competitor, E-mart, which emphasized the shopping experience over bargain basement prices.
For example, E-mart would do flash in-store specials at heavy traffic times. They’d have sellers pop up and announce to shoppers that fresh fish would be available at a low price for the next 20 minutes. The shoppers might end up paying a higher price for the fish than they would have at Walmart, but at least they’d come away with a sense of having “won”.
“We realized people love the experience of winning,” Kim says. “We’re trying to create a very lively and exciting atmosphere.”
Coupang has attempted to replicate the E-mart model online, showing big red buttons besides deals as the sales periods come to an end, and displaying a dynamic ticker of buyer numbers as they roll in. It all contributes to a sense of shopping excitement.
That approach has worked wonders for the business. It has been cash-flow positive since 2011, just over a year since the site launched. And it took Coupang 22 months to become profitable, even with substantial marketing spend.
“We’re investing seven figures in marketing and we’re still profitable,” says Kim. “We cannot find a record of any ecommerce company hat’s turned profitable faster at this scale, anywhere in the world.”
As much as strong execution, Coupang has Korea’s incredibly hot ecommerce market to thank for that. The country is the world’s sixth-largest ecommerce market, despite being only the 15th-largest economy. The ecommerce sector is growing more than 20 percent a year, and it is second only to big box stores – those E-marts – in South Korea’s retail sector. Because of its consumerist culture and population density, which makes fast deliveries easy, Korea is also a market that is ripe for online retail.
The biggest news in Coupang’s world today is in mobile. At the end of last year, the company released its iPhone app and, with no promotion, it became the number one free app in the country within three days. Within three weeks, it passed 1 million downloads. That and the Android app have now been downloaded more than 4 million times. The speed of growth on mobile has been surprising, says Kim. “It’s just skyrocketed,” Kim says. “It’s incredible.”
Mobile sales now account for about a quarter of the company’s business.