Korea, the country of romantic movies, of flower-faced idols,... But that's just the flashy image that people still think of this country. Here, the underground war between e-commerce services, especially in the field of consumer goods - household appliances, is no less fierce than the debut strategies of idol groups. Among them, there is a new name that makes even Amazon "wary" of not daring to attack this potential market, which is Coupang.
Valued at 5 billion USD and owning 1.4 billion USD received from venture capital funds, Coupang is the fastest growing e-commerce site and has the best financial situation in Korean history. Coupang said that half of the Korean population has downloaded its shopping application to their phones. That may be the reason why Amazon still hasn't dared to set foot here.
“Amazon's strength as an e-commerce company comes from its fast delivery service,” said Sehwan Choi, founder of TechforKorea, a site that tracks Korean technology developments. But in Korea, most of the units participating in the e-commerce game have also provided delivery services after one day or within the same day at very cheap prices."
Kim Bom, founder and CEO of Coupang, always mentions the goal of helping users buy and return goods easily. This also includes minimizing packaging and extra materials, and indicating exactly where and when goods will be delivered.
South Korea, with a population of 51 million people concentrated mostly in cities, is the fourth largest economy in Asia, and possesses a very advanced high-speed technology infrastructure. This is the world's 7th largest e-commerce market (worth about 56 billion USD) and is expected to surpass Japan and the UK in the next 5 years to rise to 3rd place, just behind China. China and America. Thanks to the population being mainly concentrated in urban areas, according to Mr. Kim, 99.6% of orders through Coupang are delivered within 24 hours.
Coupang owns its own delivery vehicle system, employing 10,000 people, including 4,000 delivery staff. While emphasizing the importance of technology, Coupang also focuses on personalizing service. The company tracks every customer interaction and reaction.
Mr. Kim shared: "If you have a baby in the house and don't want the doorbell to wake the baby from sleep, the delivery staff will knock on the door. If you are not home when the goods are delivered, the delivery staff will send you a photo of where they put the package.”
Coupang's products are diverse from pet food, organic food to health care products. Large investments to build infrastructure have put Coupang on red alert: 2016 business figures show the company lost about 500 million USD out of total sales of 1.7 billion USD. However, the company's CEO is not too concerned about this situation, Kim said: "We are investing in improving customer experience, and have a very long-term development vision."
Initially, Mr. Kim's goal was not to create an e-commerce site in the style of "Korea's Amazon". After dropping out of Harvard, Kim Bom initially aimed to build a website following the model of providing daily discounts like Groupon, followed by an eBay-style business platform. But after seeing that half of his customer complaints were related to delivery issues, Kim recognized an area where he could make a difference.
Focusing on customer service has helped Coupang successfully dominate the online retail market in Korea. Eric J.Kim, manager of Goodwater investment fund, one of the first units to invest capital in Coupang, said that the environment in Korea is perfect for companies like Coupang to develop. Eric Kim emphasized: "Korea is a large-scale market, with high GDP and strong economic development as well as good infrastructure." He sees the strategy focusing on improving user experience that Coupang is applying as an important key to expanding the market.
Coupang's CEO said that currently the company is completely focused on the Korean market. But a few new trends could drive Coupang's influence to markets beyond its borders.
Mr. Kim also noted that the development of major cities around the world has brought a large number of users of high-tech applications, creating conditions for companies like Coupang to grow effectively.
In Korea, 80% of orders are placed via mobile applications and 90% are concentrated on weekends. And this is also a trend happening globally. Coupang's CEO emphasized: "I don't think it's just customers in Korea who enjoy being able to buy and return goods quickly and easily."
On-demand commerce, same-day shipping, instant gratification, these are things Amazon is crazy about, and Coupang has been making them everyday.
One analyst likens Coupang to ISIS in the way the company terrorizes its opponents with unstoppable methods. A Hyundai official Keun Jong Kim also commented: "This is a red ocean." In 2015, Coupang recorded a loss of about 325 million USD.
Kim Bom paid no attention to these words, explaining that Koreans were not familiar with startups, and that if Kim's company was built properly, it could surpass Gmarket and Auction Co. (both owned by eBay) became the largest shopping website in the country. “I don't think people are used to thinking long-term and at scale. They misunderstand what we are doing, but that's okay, as long as the customer is still benefiting.”
Mr. Kim always encouraged employees to get to know other competitors: “Whatever had to be done to win the battle, they did, and whatever could be done to win the hearts of customers, we would do.”
There is a long road ahead. Coupang still has many areas it can develop and deepen, but as a startup, it has succeeded when supported and used by customers.
(Reference source: Vnexpress Kinhdoanh, http://khoi.nghiep.vn)
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