Coupang Ecommerce is the dominant online retailer in Korea. It has a huge customer base of over 17 million active consumers, and an impressive customer retention record. The company grew its customer base by over 26% year over year, and swelled revenue to $12 billion last year. And with Softbank now the largest shareholder, the company plans to continue its expansion.
Coupang’s ecommerce business is integrated end to end. Customers use the search function to find products and make purchases, then use the checkout process in just a few clicks. Items are delivered quickly through the Coupang logistics network. When items are not as described, or customers want a refund, the company makes things right in a jiffy.
Aside from its strong consumer experience, Coupang also offers a wide selection of products. They have the largest number of SKUs for both 1P and 3P merchants in the Korean market, as well as the most warehouse space. They have a machine learning system that forecasts demand and ships products more efficiently.
In addition, Coupang’s delivery force is known for its conscientious deliveries. One example is when the delivery force left handwritten notes for new mothers. Another is when a new baby slept through the delivery. However, even though these services cost much less than the alternatives, express shipping options often result in overcharging. Also, international delivery services take three weeks to arrive.
To compete with the legacy department stores, Coupang has to create a consumer experience that goes beyond opex. It must have a significant density of inventory, as well as a sophisticated inventory management system. This requires a team with deep product knowledge, skilled engineers, and the ability to understand the best warehouses.
Coupang is still innovating. The company is constantly looking for new ways to differentiate itself from the rest of the industry. Their recent IPO was valued at $60 billion. With that, they can afford to invest in more sophisticated inventory management systems, as well as expand into more markets.
Unlike Naver, which is a pure play search engine, Coupang has a specialized value proposition that it can offer to merchants. Unlike Naver, it is willing to take the risk of building its own warehouses. While this can be a costly investment, it does allow for higher margins. Furthermore, the company is more focused on improving the consumer experience than on driving churn.
Coupang focuses on attracting new customers through its unique value proposition. Merchants are drawn to the company because of its great visibility into demand, and its strong retention and customer service track records. Moreover, the company does not have to pay for any inventory up front, and can sell an item before paying the supplier. Therefore, the company has more working capital to keep its prices higher and increase gross margins.
Coupang also owns its own delivery people and trucks. This allows the company to avoid churn. Consumers also don’t have to worry about shipping problems, such as products not being as described, or the delivery being late.
