Author(s): Raghu Gopal
This week, South Korean e-commerce company Coupang, which some have dubbed the Amazon of Korea, announced a $2 billion investment from SoftBank's Vision Fund. Founded in 2010, Coupang has raised a total of $3.4 billion from its backers, including a $1 billion initial injection from SoftBank in 2015.
SoftBank's strategy for its Vision Fund is to take big stakes in companies that it believes will redefine the future. It invested in Alibaba before it became China's dominant online shopping platform, and made a fortune as it has grown into one of the world's largest Internet players. SoftBank is gaining a reputation for providing more money than companies initially hoped for, and encouraging them to grow even faster with it.
Gone are the days when Coupang was just a website and a collection of warehouses. The rising company has built up a huge delivery network to differentiate itself in a market crowded with delivery businesses and big conglomerates. It's also popular with the younger generation, as one in every two adults in Korea has downloaded its smartphone app.
Coupang has used the cash from its initial funding to integrate technology in its fulfillment process, and develop the infrastructure and capacity to deliver items quickly to customers across South Korea. The company has introduced what it calls a Rocket Delivery service that promises delivery within 24 hours, as well as a Dawn Delivery service. Coupang also boasts of its RocketPay payment service.
Coupang has grown rapidly to become the biggest player in South Korea's e-commerce market, posting revenue of $2.4 billion in 2017. It reported that sales have doubled in the past two years, and that it expects them to reach $5 billion by the end of 2018, although it's still making heavy losses as it expands. The company is now reportedly valued at $9 billion, after the latest investment from SoftBank — the largest ever in South Korea's e-commerce sector.
As Coupang faces challenges from established bricks-and-mortar retailers such as Shinsegae and Lotte, we expect it to use the fresh infusion of capital to bolster its technology platforms, allowing for speedier deliveries, an easy one-touch payment system and an artificial intelligence function to assist with purchase recommendations. The investment from SoftBank will go a long way in helping Coupang cement its market leadership.