[쿠팡 상장 후 행보는] Searching for IT services beyond shopping, delivery, and OTT…’Expanding business overseas’

Actively expanding new business and diversifying services for consumer’lock-in’

Possibility of pioneering’Korean version of Amazon’ through cloud AI platform

Coupang is expected to continue its unique aggressive investment by using funds raised from the US stock market listing. In particular, it is analyzed that it will evolve into a true’Korean version of Amazon’ by accelerating the promotion of new businesses as well as strengthening the existing distribution and logistics business as it set the goal of’everything customers want in Coupang. In fact, Coupang recently announced its intention to produce content for Coupang Play, a video streaming service (OTT), and is also spurring service expansion by officializing a live commerce service (mobile live broadcast sales). In addition, it is analyzing the possibility of data and information technology (IT) service business by applying for trademark rights such as cloud shop and cloud store. Some observers say that M&A can be launched to secure offline infrastructure beyond distribution centers to expand domestic retail market share. An official in the industry said, “Coupang’s recent move is a strategy aimed at a lock-in effect,” and said, “We will stay in Coupang for a long time and provide a service where everything is possible.”

The listing of Coupang is an opportunity to continue aggressive business expansion and investment. Coupang said in a report filed with the US Securities and Exchange Commission (SEC) on the 12th (local time) that it plans to raise funds worth $1 billion (about KRW 1.1 trillion). It is only for the purpose of calculating the registration fee, the industry view is that the actual funding amount will be much larger. Alibaba and Uber have also raised an amount 10 times more than the original target.

Eventually, Coupang has a high likelihood of trying to take the lead in the domestic distribution industry by raising funds ranging from at least several trillion won to tens of trillion won through listing. Coupang has already introduced’Rocket Delivery’, which is delivered the day after orders, through investments such as SoftBank Vision Fund (SVF) in 2015, raising the annual transaction amount to 17 trillion won. In addition, in 2018, the’Rocket Fresh’ service, which delivers fresh food the next morning, was greatly increased. The drastic investment hit. With the spread of non-face-to-face consumption trends due to the recent coronavirus infection (Corona 19), Coupang has taken over 30% of the domestic online market.

In particular, Coupang is expanding its business in all directions in addition to its logistics investment. Starting with the food delivery service’Coupangitsu’, the simple payment couppay was spun off to’CoupangPay’, and it also entered the fintech area. At the end of last year, it introduced a’Wow Membership’ subscription model that can be used from rocket delivery to OTT Coupang Play for 2,900 won per month. It is expected that Coupang will use the live ammunition secured through the listing to promote such new projects on a large scale. In fact, additional money is needed for Coupang Itz and Coupang Play as well as reissuance of the courier license. In particular, as competition in the delivery industry intensifies, existing companies such as the People of Delivery and Yogiyo are known to have spent nearly 200 billion won in marketing expenses.

Assuming that Coupang is going on a similar path to the US Amazon, it is also highly likely to enter the business of artificial intelligence (AI) platforms such as cloud services and’Eco’. Coupang has already applied for a trademark implying cloud services, and there is no tool as effective as an AI platform for combining shopping, delivery and OTT and locking in consumers.

When the ecosystem of Coupang, which Chairman Kim Bum-seok dreams of, is completed, it is expected that he will seek overseas expansion. Already in this report, “We can expand our business to other countries, and we need considerable resources to localize our services.”

In order to enter the overseas e-commerce market, domestic e-commerce services will be further strengthened. In this report, Coupang also emphasized Coupang’s competitiveness as it is faster, cheaper and more reliable than Amazon. Coupang plans to invest $870 million to build full-filment centers in seven locations to further upgrade the system. In addition, to attract more customers, Rocket Wow membership benefits will be enhanced and marketing and promotions will be expanded.

“We plan to continue to spend significant amounts to increase our customer base,” Coupang said in a report. In addition, there are some observations that Coupang may engage in M&A to strengthen its competitiveness in the distribution market, whether online or offline. It is explained that there is a possibility to secure an on-line infrastructure beyond a distribution center like a global online distribution company.

But the homework is still there. Coupang’s cumulative deficit as of the end of last year was $4.118 billion (about 4.5 trillion won), which has never made a surplus since its founding in 2010. Although aggressive investment is good, it is necessary to prove profitability that can convince shareholders after listing. In addition, the domestic and overseas e-commerce market is getting more intense. In Korea alone, not only Lotte and Shinsegae, the traditional distribution powers, but also IT giants such as Naver and Kakao are struggling with Coupang. In addition, various regulations surrounding the distribution industry must be overcome. An official in the industry said, “Coupang shook the distribution board with new services when it secured a real shot despite the deficit of the trillion won. It can be aggressive in various sectors such as the merger of the company and M&A.”

/ Reporter Park Min-joo [email protected]

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