Coupang is a South Korean e-commerce company founded in 2010. The company has quickly become the country's largest online retailer, surpassing Amazon Korea in 2018. Coupang is known for its innovative technologies, such as its own delivery network and its artificial intelligence-powered shopping platform. The company has also been expanding rapidly into new areas, such as food delivery and financial services.
Key Drivers of Coupang's Growth:
-Rocket Delivery: Coupang's signature Rocket Delivery service promises delivery of orders within 24 hours, and in some cases, within hours. This has been a major factor in the company's success, as it provides a level of convenience and speed that is unmatched by traditional retailers.
This is all possible thanks to Coupang's extensive footprint of over 100 fulfillment centers across the entirety of South Korea. Given the country is fairly small, 70% of the population lives within just 7 miles of a logistics center.
Similar to Amazon, Coupang uses machine learning and artificial intelligence in order to specify which products should be stocked in which fulfillment center based on expected demand.
Coupang also offers a service called Rocket Fresh, which is similar to Amazon Fresh, offering delivery of fresh groceries. However, unlike Amazon, the company has launched a food delivery service called Eats, which was widely popular during the lockdown of 2020.
-Data-Driven Approach: Coupang uses artificial intelligence and data analytics to personalize the shopping experience for its customers. This includes recommending products based on past purchases and browsing history, as well as offering personalized discounts and promotions.
-Expansion into New Businesses: Coupang has been expanding rapidly into new businesses, such as food delivery and financial services. This is helping the company to diversify its revenue streams and reach new customers.
Financial highlights:
- Coupang's revenue has grown at a compound annual growth rate (CAGR) of over 42% since 2018.
- 63 P/E
- 26 Forward P/E
- 13.5 P/OCF
- They've just become profitable in 2023, almost doubling their gross margin from 2021.
Global Expansion:
Coupang plans to use Taiwan as a starting point to replicate its same-day delivery success in South Korea and expand this strategy to Southeast Asia.
Coupang's next-day delivery service, Rocket Delivery, has grown faster in Taiwan in the 10 months since its launch than Rocket Delivery in Korea in the first 10 months. The company has allocated around $400 million for investment in Taiwan this year.
Replicating this business model will be harder in other countries, especially those where Amazon has a strong presence. However, the company is launching in Singapore, which only has a population of 5.7 million people and thus should be easier to penetrate.
Japan is also a key battleground as the business rolls out trial operations in the country. Tokyo specifically is a key area of focus as the population is just 14 million people and has a similar culture to South Korea. Amazon Japan is the current leader in the country, but other players such as Rakuten and Yahoo Japan hold fragmented market share positions.
Another country of focus is Malaysia. Although its population is not as wealthy as the other countries mentioned, its capital, Kuala Lumpur, has a population of 8.2 million people.
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