Korea's Coupang raises $300M to accelerate growth, offers a glimpse into the future of mobile commerce
Much as we in America might hate to admit it, not all innovation happens within our borders. Take for example, the ecommerce sector where giants like Alibaba in China, Rakuten in Japan, and ASOS and Net-a-Porter in Europe have made names for themselves among both consumers and investors round the world. The next company you might want to add to that storied list is South Korea’s Coupang.
The mobile-first ecommerce giant today announced new funding and revenue growth that puts the four-year-old company ahead of many of the last generation's category leaders. Coupang has added $300 million to its already stuffed coffers, courtesy of lead investor BlackRock Private Equity Partners, with additional participation from Wellington Management Company, LLP, Greenoaks Capital Management, and Rose Park Advisors.
But unlike many recent ecommerce flameouts like Fab, Gilt, and ShoeDazzle, Coupang’s bank account isn’t filled with venture capital. The company has raised only $100 million to date, yet has $500 million in cash in its bank after this latest financing, thanks to highly profitable operations. Coupang is currently at a $2.2 billion annualized gross merchandise value run-rate, up from $1 billion in 2013, a record for any 3-year-old ecommerce company. Perhaps more importantly, 70 percent of all its sales come from mobile, as does 80 percent of all traffic.
“We think of ourselves a bit like a look into the future of ecommerce,” says Coupang founder and CEO Bom Kim. “The rest of the world will look a lot like this in the future, we just have a laboratory of the future in South Korea, something we owe to our unique geography, smartphone penetration, and mobile broadband speeds.”
Coupang is a lot like Amazon in that it operates a direct ecommerce storefront carrying a wide range of products, as well as a marketplace for third-party merchants – the former being the largest and fastest growing segment of its business. The company has also prioritized a technology-powered logistics and fulfillment operation as a key competitive advantage. But unlike even Jeff Bezos’ behemoth, Kim’s can deliver almost anything within a few hours. BlackRock’s latest investment will allow the company to double down on its investment in technology and infrastructure.
“A big part of what we do is solve for the problems inherent in online versus offline commerce – things like no tactile feedback, and no immediate gratification,” Kim says. “We’re getting closer and closer to removing those objections every day.”
With revenue and growth numbers like it’s producing, Coupang could easily go public today. And the involvement of a late stage and public market investor like BlackRock often predicts such an exit is imminent. But while that’s likely the eventual exit strategy for the company, Kim is content with holding off on an IPO for as long as possible.
“We’ve chosen to stay private and align ourselves with great partners who are committed to the long-term,” he says. “We believe we’re still at the early stages of ecommerce 2.0, and we’re focused on making big, market-leading investments in infrastructure. BlackRock has deep investing and operating experience – they backed Alibaba – that allows them them to put all this in context and understand how this market disruption is shaping up.”
Coupang not only owns its own warehouses, but also its own fleet of delivery vehicles. The company’s drivers, which are known as “Coupang Men,” arrive adorned in company branding. This end-to-end logistics system allows Coupang to have a kind of direct and personalized interaction with its customers that few online retailers anywhere in the world can compete with.
Kim’s company is a unique hybrid of a Korean and a American-style technology company, something the founder attributes to his multi-national upbringing and which he believes has been key to the company’s success. With operations in both Seoul and San Francisco (as well as Seattle and Shanghai), Kim points to Coupang’s engineering hierarchy and architecture as pure Silicon Valley. But, the company’s speed- and execution-driven culture is very Korean inspired.
“We have a very multi-national team, and one thing that consistently surprises newcomers is our speed,” he says.
Coupang will eventually expand beyond Korea, Kim acknowledges, but it’s not a near-term priority. It doesn’t hurt that there remains massive growth opportunities within the country. The Coupang mobile app has been downloaded 19 million times, which means that two thirds of Korea’s population is still addressable.
“We’re focused on taking advantage of this unique market to develop our services in a way that will be difficult for anyone to catch up to,” Kim says.
“Coupang is one of Korea’s largest and fastest growing e-commerce companies,” BlackRock managing director Jay Park says in a statement on the deal. “Its differentiated same-day service model, deep mobile expertise, and precedent-setting online commerce offering, makes Coupang an e-commerce leader to watch – not only in Korea but globally.”
A number of Coupang’s strengths and advantages, relative to large ecommerce companies elsewhere around the globe, can be traced back to the unique characteristics of the Korean market. With more than 20 percent of the country’s population in its capital city, Seoul, and more within the outer reaches of its massive subway network, Korea is tailor-made for rapid delivery. South Koreans have also been some of the earliest adopters of mobile technology and the country has shown a willingness to invest in advancing its communication infrastructure.
But while the rest of the world may trail Korea in its mobile infrastructure and adoption, Kim’s prediction that Korea represents a glimpse into the future seems spot on. And in that sense, when markets like China, Europe, Russia, Brazil, and even the US do catch up – when, not if – Coupang will have more experience than anyone in serving the mobile-first consumer.
“We’re setting a new standard for high-touch, personalized mobile shopping and and fast delivery,” Kim says. “I think some of the things we’re doing may seem futuristic for many other markets, but that’s our goal – to lead innovation for commerce and mobile commerce around the world.”