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Billion Dollar Unicorns: Coupang Raises the Banner for South Korea

Posted on Tuesday, Sep 15th 2015

According to a recent eMarketer market, the total retail e-commerce market in South Korea is estimated to grow 11% this year to $36.76 billion, making them the third largest e-commerce market in the Asia-Pacific region, after China and Japan. E-commerce is expected to account for nearly 10% of South Korea’s total retail market share. The South Korean market is expected to grow to $47.8 billion by the year 2018. Billion Dollar Unicorn club member Coupang is already making big strides in the region.

Coupang’s Offerings

Seoul, South Korea-based Coupang was founded in 2010 by Bom Kim as South Korea’s version of daily deals site Groupon. But Bom soon realized the failings of the business model and pivoted to becoming an e-commerce platform that not only owns the marketplace, but also shipment and fulfillment capabilities.

Today, Coupang offers a curated selection of merchandise ranging from baby products to fashion, beauty products, consumables, home goods, décor products, books, toys, sporting goods, electronics, and tickets for travel and cultural events. They still have a daily deals section, but a majority of their revenues comes from sales made on their site. Their shipment delivery trucks and delivery team ensure that they are able to deliver to South Korea’s dense population within a few hours of the order being placed. In fact, a majority of their orders are completed either the same day or the next day. They have also successfully adopted the mobile trend as 70% of their sales are completed through mobile devices.

They do face some regulatory issues which makes operations difficult for them. For instance, the South Korean authorities do not allow companies to store credit card details. Thus, users have to enter the payment details each time they make a purchase. But despite the regulations, Coupang is doing well and is commonly known as the Amazon of South Korea.

Coupang’s Financials

Coupang has reported strong growth since inception. Gross annual merchandise volume of sales has increased from $650 million in 2012 to more than $1.8 billion last year. Coupang plans to increase this number to $3 billion this year. Detailed revenues and profitability matrix are not known, but the company has been cash flow positive since 2012.

They have been venture funded so far with $1.4 billion in investments from SoftBank, BlackRock Private Equity Partners, Greenoaks Capital, Illuminate Ventures, Rose Park Advisors, Wellington Management, Brad Kotansky, Cross Creek Advisors, LaunchTime, Altos Ventures and Sequoia Capital. Their last round of funding was held in June this year when they raised $1 billion from Softbank at a valuation of $5 billion. Coupang plans to use those funds to expand their delivery team to ensure faster shipping times and customer satisfaction. Back in 2011, they planned to go public in two years, but as of now, they have deferred their plans as they believe that they are able to successfully raise money from private investors.

More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.

This segment is a part in the series : Billion Dollar Unicorns


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