Coupang has turned industry heads around the world, with many claiming the Korean platform has even managed to ‘out-Amazon’ Amazon. As it rides to the rescue of luxury fashion retailer Farfetch in a $500m deal, Retail Week looks at what sets the ecommerce giant apart, and what UK retailers might be able to learn from its example.  

When Bom Kim dropped out halfway through a Harvard MBA to launch Coupang back in 2010, his initial idea was a Groupon-style business that offered South Korean shoppers daily deals on restaurants, spas and gadgets.

Within months the entrepreneur spotted the growing scope of ecommerce, overhauling the business model to emulate an eBay-inspired third-party marketplace instead. 

But Kim still wasn’t satisfied, reneging on a planned IPO in 2012 to transform Coupang once again. This time into an end-to-end ecommerce platform that took full control of the customer experience and sold everything from fresh fruit to Samsung phones and second-hand cars.

The second pivot paid off. Earlier this year, the company posted annual sales of $18.4bn in 2021, up 54% year on year, growth that captures the scale of the retailer’s penetration in the South Korean market.

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In Q4 of 2021, 17.9 million users purchased at least one product from Coupang

In the fourth quarter of 2021, 17.9 million users purchased at least one product from the ecommerce platform, according to The Korea Economic Daily. That’s the equivalent of one out of every two online shoppers in South Korea choosing to spend their cash with Coupang. 

These results successfully seduced investors too and saw the retailer launch on the New York Stock Exchange in March 2021 with a market valuation of $102.2bn – the largest of any Asian company in the US that year. 

Unsurprisingly Coupang has turned industry heads around the world, with many claiming the Korean platform has even managed to ‘out-Amazon’ Amazon. So, what sets it apart? And what might UK retailers be able to learn from its example? 

Ultra-fast delivery

The first big contributor to Coupang’s success is undoubtedly its focus on ultra-fast delivery speeds. South Korea has had a historically fragmented delivery network, but by deploying a combination of AI and localised fulfilment Coupang changed all that.

So ubiquitous are its warehouses now that the company claims 70% of all Koreans live within seven miles of a site. To boost efficiency further, proprietary algorithms are used to calculate everything from driver delivery routes to how to stack packages.

As a result, the company’s Rocket delivery option guarantees same-day or next-day delivery and in 2019 it introduced Dawn delivery, which guarantees that purchases made before midnight will arrive before 7am the next day. 

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Coupang’s Rocket delivery option guarantees delivery before 7am the following day

“Their delivery infrastructure has accelerated their growth,” says David Roth, chief executive of The Store at WPP and chair of BAV Group.

“That was relatively new in Korea in terms of overnight and same-day delivery. The Korean distribution infrastructure is quite complex so it made a significant difference.” 

Such a difference, in fact, that Coupang claims 99.3% of orders received are now delivered within 24 hours – putting it streets ahead of Amazon.

Ever looking to stretch the company further, in 2021 Coupang ditched its reliance on subcontractors to ship and deliver orders to take each step of the process in house, with the launch of Coupang Logistics. 

Coupang claims 99.3% of orders received are now delivered within 24 hours – putting it streets ahead of Amazon

“Coupang are looking at a much leaner supply chain and logistics distribution model,” says Anson Bailey, head of consumer and retail for the ASPAC region at KPMG.

“They’re far more flexible and agile. What they’ve done is go to the next level.”

The second key differentiator is user experience. Rather than leave product quality and customer experience to third-party vendors, Coupang oversees it all in an effort to deliver what Bom Kim labels “WOW experiences”.  

In this way the platform emulates the likes of JD in neighbouring China, rather than Alibaba, explains Jeff Towson, an independent consultant specialising in digital strategy and digital transformation.

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Food-delivery service Coupang Eats was launched in 2019

“Unlike Alibaba, which sells everything to everyone from everybody, JD very actively controls the user experience. It controls what product can be put on the platform, so it’s known as the ‘quality’ company, and if you have a problem, they have well-trained delivery people and customer-service agents that will pick up the phone. Coupang is a lot like that.”

And they’re always raising the bar higher. “That’s their perpetual aim, to always improve the customer experience.” 

That has meant delivering on the basics, such as creating a user-friendly app, promising great customer service “where people pick up the phone” and a simple returns process. But more recently it’s also meant extending their services into an almost one-stop shop.

In 2019, it launched food delivery service Coupang Eats. In 2020, it began offering same-day delivery of fresh groceries. And later that same year it launched video-streaming service Coupang Play. 

Rapid growth

They share a similar strategy, but Coupang Eats is far smaller than Amazon Fresh. Amazon’s grocery arm alone brought in $49.9bn in sales in 2021, while Coupang’s entire business (combining Eats, Play, Pay and its overseas operations) is worth a fraction of that, a reported $181m. However Coupang Eats has achieved a far more rapid rollout. Fifteen years after it first launched, Amazon Fresh is still unable to deliver to all postcodes in either the US or the UK, for instance, while Coupang offers the service countrywide in South Korea. 

But in comparing the two, it’s important to note that South Korea is a prime market for an ecommerce operator, says Bailey. Not only is it far more densely populated with most areas easier to reach than, say, the suburbs of California, making ultra-fast delivery more achievable, but there is a greater willingness among South Korean consumers to embrace ecommerce.

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Coupang’s same-day grocery delivery service operates countrywide in South Korea

For starters, the company has a comparably high rate of mobile and internet adoption: 95% of Korean shoppers own a smartphone, according to figures from the Pew Research Centre.

“Both Chinese and Korean consumers are incredibly tech-savvy,” says Bailey. “They’re digital natives. [That’s why] a lot of tech and innovation tends to come out of those regions.

“We’ve seen this end-to-end digitisation and South Korea was one of the first places that really drove all of that.”

“They’re a great example of a specialised local player fending off the giants”

Jeff Towson, consultant

This momentum was only accelerated by the pandemic – Coupang reported a threefold increase in sales in 2021 compared with pre-pandemic revenues in 2019.  

Coupang has harnessed the potential of its location, says Towson, with a bold and colourful brand identity that appeals to Korean consumers alongside a user experience that reflects their interest in gamification.

“They’re a great example of a specialised local player fending off the giants,” he adds. “It’s not like Amazon and Alibaba don’t want South Korea. But you’ve got this local company that’s deeply entrenched.

“That’s not a bad model for elsewhere, where the behaviour is different and localised enough that a local player is just better suited for it than a one-size-fits-all Amazon.”

It’s not the only lesson UK retailers could learn from Coupang either. The key takeaway from the retailer’s growth must be paying greater attention to innovation emerging from the Asia-Pacific region. It’s how Coupang has outpaced the competition, says Roth. 

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South Korean consumers are digitally savvy, with 95% of shoppers owning a smartphone 

“They keep a much closer eye on China than the rest of the world does and are much quicker to see what’s interesting and right for them and then adopting it than most Western countries,” he explains.

“We’re guilty outside of Asia of thinking Amazon is the start, middle and end of anything that’s innovative in the ecommerce space, but if you look at the likes of Chinese and Korean players, in their innovation if not their size, they outpace Amazon significantly.”

Bailey echoes this. “The era of consumption in Asia is alive and kicking, with some very sophisticated, tech-savvy and digitally minded consumers in places like South Korea. 

“Tech and innovation are not only a Western concept. It’s not just Coupang either. There is a generation of these start-ups emerging that are securing funding with incredibly smart founders. Quite frankly, the consumer base is here.”

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