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B1 Intermediate 27 Folder Collection
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I'm inside Coupang's fulfillment center just outside Seoul.
This company's been dubbed the Amazon of South Korea
and was recently ranked as the country's most valuable start-up.
We know the truck it's gonna go into, the route it's going to be out on,
and then that tells us how it needs to be sorted here and when it needs to leave.
That's propelled founder Bom Kim to billionaire status and made Coupang into a national icon.
It's not an exaggeration to say that we are in every apartment complex
and every apartment building at least once a day.
That's not bad for a guy who dropped out of Harvard Business School after just six months.
I had a belief when I was in grad school that I had a very short window
to really make something that had an impact.
During a recent visit to Seoul, I got to sit down with the 41-year-old
e-commerce CEO at Coupang's headquarters.
And while he may have reached the heights of success now, he says he didn't exactly
set out to become the next Jeff Bezos.
In fact, when the $9 billion e-commerce giant started here in Seoul back in 2010,
it was as a different business entirely.
The shape of Coupang, the business model of Coupang,
what Coupang looks like today, went through a lot of change.
When Kim dropped out of business school in the late-2000s,
he initially started Coupang as a Groupon-style daily deals business.
But as he noticed the growing scope of technology,
he quickly transitioned the company into a third-party online marketplace.
It was a success.
Within three years, Kim says the company crossed $1 billion in sales and was on the cusp of an IPO.
But at the eleventh hour, he pulled the deal and radically changed the business model,
convinced he could build something better.
There had been this nagging feeling for months, where we had to be honest with ourselves and
said, once you go public, it's much harder to really change your direction.
And was the platform we had built, were the services and experiences that we were providing
for our customers, creating a 5% difference or were we creating that kind of world where
the customers we love, their jaws would drop?
And the reality was no.
If we wanted to provide something that really mattered to customers,
we had to go through an enormous amount of change.
We had to change our entire technology stack, the way we did business, our business model.
That's a bold move when you're on the crux of an IPO.
It was very, very difficult.
And I think that was the most difficult, but the choice that I'm most proud of.
So Coupang was born again, this time as an end-to-end shopping platform
designed to manage the full customer journey, from desktop to door.
South Korea's e-commerce market has been growing rapidly over the past decade.
This year, online sales are projected to expand by 18% to hit over $100 billion,
ranking it in fifth place globally after China, the U.S., the U.K. and Japan.
By 2022, it is expected to jump to third place.
That's thanks in part to fast internet speeds and high smartphone penetration
in a country famed for tech conglomerates like LG Samsung.
But it's also reflective of its culture.
South Korea has some of the longest working hours in the world, meaning leisure time is
scarce and consumers are willing to pay a premium for convenience.
Curious to learn more, I met up with Jade Lee, an analyst at market research firm Euromonitor,
to hear her take on the Korean market landscape.
There are several social factors which make e-commerce really successful in South Korea.
First of all, single-person households are rapidly growing, taking around 30%.
These single-person households do not have sufficient time to go offline shopping.
The second one is the well- developed digital infrastructure,
especially the mobile simple payment platforms.
And then the last one is the well-structured logistics system.
South Korea is relatively smaller, so it's able to set up logistics
quicker and easier compared to other countries.
Kim responded to those market characteristics in spades.
That included Coupang creating its own UPS- style logistics business, Rocket Delivery,
designed to provide super speedy, personalized service.
The only models that we had seen were primarily like that of Amazon, which had
built out an impressive fulfillment infrastructure but had relied, in large part, on a very advanced
infrastructure that had been built out by the U.S. Postal Service.
And at that time, we really envied that.
So we built, again, not only a fulfillment infrastructure, but the largest directly controlled
fleet of trucks and drivers to deliver those products in multiple ways throughout the day.
So, what seemed like a curse at that time, that we had to build this entire infrastructure,
and build the technology to integrate it all, end-to-end, by ourselves, from scratch,
ended up becoming a huge blessing.
Today, Coupang's more than 5,000 delivery drivers, known as Coupangmen,
deliver 99.3% of orders within 24 hours.
Its new Dawn Delivery service even promises to go beyond Amazon Prime's,
providing 7am delivery for orders made before midnight the night before.
You can get lobster, fresh cakes...
Fresh lobster for breakfast!
Fresh lobster for breakfast! We actually have breakfast foods as well.
But if you have a birthday, you can get a cake in the morning.
If your printer's run out of ink, or you need a new computer, you can get a computer before 7am.
That service is not only a nice-to-have but a necessity for a business that sees
a third of its orders come in between 10pm and midnight, says Kim.
We realized that most customers were ordering at night.
And if they wanted more selection delivered to them faster, the best experience would
be if they could order it before they go to bed, wake up and find it in front of their door.
It's like Christmas!
Yeah, it's magical.
According to Kim, that has helped set him apart in a wildly competitive market.
Last year the country's largest e-commerce site also ranked as consumers' preferred
online retailer, outranking local competitors such as Gmarket and 11Street.
Kim says the app has now been downloaded by over 25 million Koreans,
representing around half of the country's 51-million-person population.
The company today is over $10 billion in sales, well over $10 billion in sales,
growing 60% year-over-year.
That didn't happen because of something we did, you know, this year.
That popularity has investors excited, too.
As of November 2018, the company has attracted more than $3.6 billion from investors,
including Softbank, Sequoia Capital and BlackRock, giving the company an estimated valuation of $9 billion.
It's easy to have a dream and fail if you don't have shareholders and investors
who are willing to take the journey with you for the long-term.
Kim now plans to pump that funding into the company's growth in Korea,
building out its food delivery service and potentially expanding into new markets.
Coupang is still focused on the domestic market and trying to expand there.
But with those financial investments from Softbank, Coupang is expected to go in further
to other APAC regions.
The environment that Korea has, the high urbanization, the extreme population density,
and the IT infrastructure, those are things that I think will be shared by customers
in many areas, many regions, especially in Asia, as they modernize.
We have offices all over the world.
We have an office in Silicon Valley, in Seattle, in Beijing, and Shanghai,
so in many ways we're building a global company.
But ultimately Kim says his main mission is to remain committed to customer service.
And if that means reinventing his business once again, well, at least he has the experience.
I don't know if I can tell you that six months from now, or six years from now,
that we will look similar to what we look today.
But I can tell you that we will always be a company, a technology company, that is trying
to leverage what we can from human ingenuity and technology to obsess about some
aspect of customers' lives that we want to improve exponentially.
That will be a constant.
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B1 Intermediate

How this Harvard dropout founded South Korea's most valuable start-up | Make It International

27 Folder Collection
Summer published on August 8, 2020

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