SEOUL, South Korea – Small white delivery trucks take to the streets throughout South Korea. Uniformed workers send photographs of packages delivered safely to impatient customers. Workers can move so fast, his employer promises, that he calls the service a “rocket delivery”.
The truck and operation belong to Kauppung, a start-up founded by a Harvard Business School dropout that has shaken shopping in South Korea, an industry that has long dominated Massive, Button-Down Sets. In a country where people encounter “papalli papilli”, or get things done quickly, Kupang is “next day” and even “same-day” and “morning” and groceries and millions of other people The offer became a household name at no additional charge.
The company, sometimes called Amazon of South Korea, is set to receive a major endorsement on Thursday from Wall Street. Its shares are expected to begin trading in the initial public offering, which will increase to $ 4.2 billion and value the company at approximately $ 60 billion, the second-largest US tally for an Asian company after the Alibaba Group of China in 2014 . Its shares were priced at $ 35 on Wednesday, according to a person close to the company.
Kapang may require money. Large conglomerates from South Korea, called Chabol, and others are building their own distribution networks as Kuipung plans its expansion. It also faces other issues, such as the growing concerns about the working conditions following the death of several kaupapung warehousing and delivery workers that some relatives and labor activists blamed on overwork and poor labor practices.
At the moment, Tsang is South Korea’s largest e-commerce retailer, owing to people trapped at home during the epidemic and craving fast delivery in the country.
“I wouldn’t say that I can’t live without Kaupang, because there are a lot of other online shopping options available that compete with each other, and some of them can be as quick as Kaupang or cheap,” Kim Said Su-kyeong, a Coupang shopkeeper and mother in Seoul. “But Coupang has branded itself so well that the name first comes to my mind when I think of shopping online.”
As Bum Suk Kim, who started Kuppang in 2010, Likes to say, “Our mission is to create a world where customers wonder ‘how have I ever been without Kappang?”
Mr. Kim, 42, ran an informal and short-lived Harvard alumni magazine in the United States before returning to his birth country to revolutionize his e-commerce industry. Coupung’s rapid growth was driven by a combination of daring entrepreneurship and branding.
The company name is a mixture of the English words “coupon” and “pang”, which is the Korean sound for hitting the jackpot. In an industry where most delivery workers move around in concert trucks wearing drub jackets, Coupeng’s fleet full-time drivers – known as Kapang Men, but recently renamed Coupeng Friends Hai – Branded, company-issued vehicles wear bright uniforms and cruise around.
“Yung-hwang, professor of distribution management at Jungan University, Xu Yun-hwang, said,” Kapang has grown rapidly while meeting two of the most important needs of customers: affordable prices and fast delivery. “Coupang also offers more goods than competitors, so consumers believe they can find anything on Coupang.”
Only a few start-ups – such as Never, South Korea’s major web portals and search engines, and Kakao, its flagship messaging apps and online banks – have been successful as Kuppung. But both Naver and Kakao are listed in South Korea. Mr. Kim took Coupe to Wall Street, giving big investors and the court a higher valuation target, which would allow his company to bring its rivals back home.
South Korea is one of the fastest growing e-commerce markets in the world, which is projected to become the third largest in the world this year, behind only China and the United States. According to market research company Euromonitor International, its volume was $ 128 billion last year, which is expected to reach $ 206 billion by 2024.
And it is ideal for e-commerce. The country is inhabited by about 52 million people, the majority of whom live in densely populated cities. Nearly every household has high-speed Internet, and people pay taxes and gas bills with a smartphone.
Long before e-commerce arrived, South Korea already had a vibrant distribution culture. The families made phone calls to get their food around the clock. Dry-clean workers climbed the stairs to the apartment buildings to deliver freshly pressed clothes. Motorbike couriers reported documents, flowers and WhatsApp from one district to another.
Kapang’s first rivals were eBay-style markets where customers found sellers. Delivery was built by third-party logistics companies that contracted with independent couriers. Delivery could take several days.
When Coupang launched its “rocket delivery” service in 2014, it set off a price and delivery war. It has since built its network of logistics hubs, with 70 percent of the population now living within seven miles of a Kauppung logistics center, according to the company. The company says that it uses machine learning to predict demand and store inventory in the warehouse. It also runs its own fleet of 15,000 full-time full-time couriers.
It doubled its work force to 50,000 in 2020, becoming South Korea’s third-largest private-sector employer. It plans to create 50,000 more jobs by 2025.
Analysts said that Kuppang borrowed from Amazon’s playbook by trying to become a major market force before making a profit. The company’s revenue nearly doubled to $ 12 billion last year. But heavy investment in its logistics network, made possible by funding from foreign investors such as Japan’s SoftBank and its Vision Fund, kept it in the red. Its annual net loss was $ 1 billion in 2018, before being limited to $ 475 million last year.
It recently launched a food-delivery service, Kuppung Eats, and a video streaming app, Kuppung Play. Unlike Amazon, Coupang does not have other businesses such as cloud computing, which can easily generate the cash needed for major expansion. And rivals are putting up fierce competition.
Some chambol, family-controlled groups that dominate the economy are expanding their e-commerce business, most notably Lotte and Shinsege, which operate the country’s largest department store and shopping mall chain. So is Naver, which is already An e-commerce veteran.
As competition continues to grow, superfast delivery is rapidly becoming the new norm, undermining the novelty of Kuapung’s “rocket delivery” service.
Tsang has also faced scrutiny over his labor practices. Former Coupang workers and labor activists accused the company of exploiting their warehouse workers, asking their crazy mob to turn over the orders as soon as possible.
According to government data, the number of workers has doubled, from the number of people suffering from work-related injuries or illnesses in Tsang and its warehouses to 515 in 2019 to 982 in 2019.
Park Mi-sook, whose son, Jung Deok-joon, died soon after returning home from a heart attack, “Kappung is an inhumane company that treats its workers like slaves or machine parts, Squeezes them until the last drop. ” From a night shift at a Coupang warehouse. His death was acknowledged as a work-related incident, and Kappang has since apologized.
Koupung has denied misconduct with his cadres. Last year, it said, it invested $ 443 million in automation of its warehouses and increased its warehouse work force by 78 percent to 28,400 to make its workforce more efficient and reduce workload.
“What has made Coupang rocket delivery possible was its large-scale employment and investment,” the company said a statement.
And it continues to pitch itself as an essential service for busy South Koreans.
in Letter For potential investors, Mr. Kim put forth an example of a quintessential Kapang shopkeeper: a working mother who realizes late at night that she has forgotten to shop, and then orders online through Koupang.
“When he opens his eyes, it’s like Christmas morning,” Mr. Kim wrote. “The order waits at his front door.”