SEOUL, South Korea – Small white delivery vans running on the streets across South Korea. Uniformed workers send pictures of packages safely delivered to impatient customers. Workers can move so fast that their employer promises a service called a “rocket delivery” service.
The vans and activity that belonged to Coupang, a startup founded by a graduate student at Harvard Business School, rocked shopping in South Korea, an industry long dominated by governed by giant corporations. In a country where people are obsessed with “ppalli ppalli” or get things done quickly, Coupang has become a household name for offering “same-day” and “same-day” grocery deliveries. “And” dawn “and millions of free items.
The company, sometimes referred to as the Amazon of Korea, will receive a massive endorsement Thursday from Wall Street. The company’s shares, which are expected to begin trading in the initial public offering, will raise $ 4.2 billion and value the company at around $ 60 billion, the second largest number for the company. US against an Asian company after China’s Alibaba Group in 2014. On Wednesday, the company’s shares were valued. at $ 35, according to someone close to the company.
Coupang may need money. Major Korean conglomerates called chaebol and others are building their own delivery networks as Coupang plans to expand. It also faced other problems, such as growing concerns about working conditions following the deaths of some warehouse and delivery workers in Coupang that some relatives and activists said. Labor is blamed for overwork and poor labor practices.
Currently, Coupang is the largest e-commerce retailer in South Korea, and its position is strengthened by people stuck at home during a pandemic and by locals wanting faster deliveries.
“I wouldn’t go too far saying I can’t live without the Coupang, because there are so many other online shopping options available here that compete fiercely with each other and some of them could be as fast as the Coupang. or cheaper, ”said Kim Su-kyeong, a Coupang shopper and mother in Seoul. “But Coupang has built itself very well, which is the first name that comes to mind when I think about shopping online.”
As Bom Suk Kim, who started Coupang in 2010, likes to say, “Our mission is to create a world where our customers wonder” How did I ever live without Coupang? “
Mr. Kim, 42, ran an unofficial and short-lived magazine of Harvard alumni in the United States before returning to his homeland to revolutionize his e-commerce industry. Coupang’s rapid growth has been fueled by a combination of bold entrepreneurial spirit and branding.
The company’s name is a combination of the English words “coupon” and “pang”, the Korean sound for winning the jackpot. In an industry where most deliveries drive in luxury vans wearing gray vests, Coupang’s full-time team of drivers – known as the Coupang Men, but has recently been renamed. Coupang Friends – wear light-colored uniforms and walk around in company-issued, branded vehicles.
Ju Yoon-hwang, professor of distribution management at Jangan University, said: “Coupang has grown rapidly by meeting the two most important customer needs: low price and fast delivery. “Coupang also offers more goods than its competitors, so consumers believe they can find anything on the Coupang.”
Only a handful of startups – like South Korea’s dominant web portal and search engine Naver, and Kakao, their leading online banking and messaging app – have been as successful as Coupang. But Naver and Kakao are both listed in South Korea. Mr. Kim brought Coupang to Wall Street with the aim of attracting larger investors and a higher valuation would allow his company to outpace its rivals back home.
South Korea is one of the fastest growing e-commerce markets in the world, expected to become the third largest market in the world this year, behind only China and the United States. Its volume, worth $ 128 billion last year, is expected to reach $ 206 billion by 2024, according to Euromonitor International, a market research firm.
And it is ideal for e-commerce. About 52 million people live in the country, the majority of whom live in densely populated cities. Nearly every home has high-speed internet, and people pay taxes and gas bills with their smartphones.
Long before e-commerce came along, Korea had a vibrant delivery culture. Families have phoned for round-the-clock deliveries. Dry cleaning workers climb stairs in apartment complexes to deliver pressed new clothes. Courier motorbikes for documents, flowers and anything from one district to another.
Coupang’s first competitors were eBay-style markets where customers found sellers. Deliveries are made by third party logistics companies that have contracted with independent carriers. Delivery may take several days.
When Coupang started “rocket delivery” service in 2014, it waged a war on price and delivery. From there it built its own network in logistics service centers, with 70 percent of the population currently living within seven miles of a Coupang logistics hub, according to the company. The company says it uses machine learning to predict demand and to stock up on goods in warehouses. It also operates its own fleet of 15,000 full-time Coupang Friend carriers.
It has also doubled the workforce to 50,000 by 2020, making it the third largest employer in South Korea’s private sector. It plans to create 50,000 more jobs by 2025.
Analysts say Coupang borrowed from Amazon’s game by looking to become a dominant force in the market before making a profit. The company’s revenue nearly doubled last year to $ 12 billion. But huge investments in its logistics network, made possible by capital from foreign investors such as Japan’s SoftBank and its Vision Fund, have left the business in color. red. The company’s annual net loss increased to $ 1 billion in 2018 before shrinking to $ 475 million last year.
It recently introduced Coupang Eats, a meal delivery service, and Coupang Play, an online video streaming app. But unlike Amazon, Coupang doesn’t have other businesses, like cloud computing, that can easily generate the cash needed for massive expansions. And competitors are competing fiercely.
Several chaebols, the family-controlled conglomerate that dominates the economy, are expanding their e-commerce businesses, especially Lotte and Shinsegae, which run department store chains and shopping malls. biggest shopping in the country. Naver, too, is already an e-commerce giant.
As competition heated up, super-fast delivery quickly became the new standard, undermining the novelty of Coupang’s “rocket delivery” service.
Coupang also faces close scrutiny of its labor practices. Former Coupang workers and labor activists accused the company of exploiting warehouse staff in a frantic fever to turn orders as quickly as possible.
According to government data, when the number of workers doubled, the number of work-related injuries or illnesses at Coupang and its warehouses increased to 982 in 2020 from 515 in 2019. , according to government data.
“Coupang is an inhumane company that treats its workers like slaves or machine parts, forcing them to the last drop,” said Park Mi-sook, whose son, Jang Deok-joon, died of a heart attack last October, shortly after returning home. from an overnight shift at a Coupang warehouse. His death was believed to be a work-related incident, and Coupang has since apologized.
Coupang has denied mistreating its workers. Last year alone, they said, they invested $ 443 million in the automation of their warehouses and increased the warehouse workforce by 78%, to 28,400 people, to make their workers efficient. and reduce workload.
“What makes Coupang’s missile deliveries possible is its employment and huge investment,” the company said in a statement.
And it continues to present itself as an essential service for busy Koreans.
In a letter to potential investors, Mr Kim gave an example of a quintessential Coupang shopper: a late-night work mom finds herself forgetting to shop and then order online through Coupang.
“When she opened her eyes, it was like Christmas morning,” Mr. Kim wrote. “Orders are waiting at her front door.”