SEOUL, South Korea – Small white delivery trucks take to the streets throughout South Korea. Uniformed employees send photographs of packages delivered safely to impatient customers. Workers can move so fast, his employer promises, that he calls the service a “rocket delivery”.
The truck and operation belong to Kauppung, a start-up founded by a Harvard Business School dropout that has shaken shopping in South Korea, an industry long dominated Massive, Button-Down Sets. In a country where people suffer from “papalli papilli”, or get things done quickly, Kupang is “next day” and even “same-day” and “dawn” and groceries and millions of other people Has become a household name by offering no additional charge.
The company, sometimes called the Amazon of South Korea, received major support from Wall Street on Thursday. Its shares began trading at $ 59.60 a share, 70 percent above the initial public offering price of $ 35. The IPO raised $ 4.6 billion and valued the company at $ 102 billion, the second largest for an Asian company after the Alibaba Group of China in 2014.
Kapang may require money. Large conglomerates from South Korea, called Chabol, and others are building their own distribution networks as Kuipung plans its expansion. It also faces other issues, such as the growing concerns about the working conditions following the death of several kaupapung warehousing and delivery workers that some relatives and labor activists blamed on overwork and poor labor practices.
At the moment, Tsang is South Korea’s largest e-commerce retailer, owing to the number of people trapped at home during the epidemic and craving fast delivery.
“I wouldn’t say that I can’t live without Kaupang, because there are a lot of other online shopping options available that compete with each other, and some of them can be as quick as Kaupang or cheap,” Kim Said Su-kyeong, a Coupang shopkeeper and mother in Seoul. “But Coupang has branded itself so well that the name first comes to my mind when I think of shopping online.”
As Bum Suk Kim, who started Kuppang in 2010, Likes to say, “Our mission is to create a world where customers wonder how I ever lived without a coupe?”
Mr. Kim, 42, ran an informal and short-lived Harvard alumni magazine in the United States before returning to his birth country to revolutionize his e-commerce industry. Kapang’s rapid growth was driven by a combination of daring entrepreneurship and branding. This includes heavy spending on infrastructure to limit the inconveniences typically encountered with online orders and returns, like a cardboard box. Customers who belong to its membership program, Rocket Wave, can return the Kappang product without leaving it outside their door, without a box or return label.
“It’s not just free – it’s a stress-free experience,” Mr. Kim said in an interview on Thursday. “We’ve really tried to go to those extremes that have a really high bar to not do something incrementally different, but think about how we can just change its actual frame – the framework. “
The company’s name is a mixture of the English words “coupon” and “pang”, which is the Korean sound for hitting the jackpot. In an industry where most delivery workers move around in nondescript trucks wearing drub jackets, full-time drivers in Coupeng’s fleet – known as Kapang Men, but recently renamed Coupeng Friends KEEPED – Wear shiny uniforms and cruise around in branded, company-issued vehicles.
“Yung-hwang, a professor of distribution management at Jungan University, said Xu Yun-hwang,” has grown rapidly by meeting the two most important needs of customers. “Coupang also offers more goods than competitors, so consumers believe they can find anything on Coupang.”
Only a few start-ups – such as Never, South Korea’s major web portals and search engines, and Kakao, its flagship messaging apps and online banks – have been successful as Kuppung. But both Naver and Kakao are listed in South Korea. Mr. Kim took Coupe to Wall Street, giving big investors and the court a higher valuation target, which would allow his company to bring its rivals back home.
South Korea is one of the world’s fastest growing e-commerce markets, which is projected to become the third largest in the world this year, behind only China and the United States. According to market research company Euromonitor International, its volume was $ 128 billion last year, which is expected to reach $ 206 billion by 2024.
And it is ideal for e-commerce. The country is home to around 52 million people, the majority of which is in densely populated cities. Nearly every household has high-speed Internet, and people pay taxes and gas bills with a smartphone.
Long before e-commerce arrived, South Korea already had a vibrant distribution culture. The families made phone calls to get their food around the clock. Dry-clean workers climbed the stairs to the apartment buildings to deliver freshly pressed clothes. Motorbike couriers reported documents, flowers and WhatsApp from one district to another.
Kapang’s first competitors were eBay-style markets where customers found sellers. Deliveries were created by third-party logistics companies that contracted with independent couriers. Delivery could take several days.
When Coupang launched its “rocket delivery” service in 2014, it set off a price and delivery war. It has since built its own network of logistics hubs, with 70 percent of its population now living within seven miles of the Kauppung logistics center, according to the company. The company says that it uses machine learning to predict demand and store inventory in the warehouse. It also runs its own fleet of 15,000 full-time full-time couriers.
It has doubled its work force to 50,000 in 2020, making it South Korea’s third-largest private sector employer. It plans to create 50,000 more jobs by 2025.
Analysts said that Kuppang borrowed from Amazon’s playbook by trying to become a major market force before making a profit. The company’s revenue nearly doubled to $ 12 billion last year. But large-scale investment in its logistics network, made possible by funding from foreign investors such as Japan’s SoftBank and its Vision Fund, kept it in the red. Its annual net loss was $ 1 billion in 2018, before being limited to $ 475 million last year.
“The picture is very clear about Kim’s strength,” Mr. Kim said. While the company has not offered any time when it can turn a profit, he said Tsang would be “in a position to self-finance” and remain “aggressive with reinvestment”.
It recently launched a food-delivery service, Kuppung Eats, and a video streaming app, Kuppung Play. But unlike Amazon, Coupang does not have other businesses such as cloud computing, which can easily generate the cash needed for major expansion. And rivals are putting up fierce competition.
Some chambol, family-controlled groups that dominate the economy are expanding their e-commerce business, most notably Lotte and Shinsege, which operate the country’s largest department store and shopping mall chain. So is Naver, which is already An e-commerce veteran.
As competition continues to grow, superfast delivery is rapidly becoming the new norm, undermining the novelty of Kuapung’s “rocket delivery” service.
Tsang has also faced scrutiny over his labor practices. Former Coupang workers and labor activists accused the company of exploiting its warehouse workers, asking its insane mob to turn over orders as soon as possible.
According to government figures, the number of workers has doubled, from the number of people suffering from work-related injuries or diseases in Tawang and its warehouses to 515 in 2019 to 982 in 2019.
Park Mi-sook, whose son, Jung Deok-joon, died shortly after returning home from a heart attack in October, “Kappang is an inhumane company that treats its workers as slaves or machine parts.” Like she does. ” From a night shift at a Coupang warehouse. His death was acknowledged as a work-related incident, and Kappang has since apologized.
Koupung has denied misconduct with his cadres. Only last year, it said, it invested $ 443 million in automation of its warehouses and increased its warehouse work force by 78 percent to 28,400 to make its workers more efficient and reduce workload.
“Extensive employment and investment was possible to make the coup rocket delivery possible,” the company said. ” a statement.
And it continues to pitch itself as an essential service for busy South Koreans.
in Letter For potential investors, Mr. Kim put forth an example of a quintessential Kapang shopkeeper: a working mother who realizes late at night that she has forgotten to shop, and then orders online through Koupang.
“When he opens his eyes, it’s like Christmas morning,” Mr. Kim wrote. “The order waits at his front door.”