Four-year-old South Korea-based online marketplace Coupang did $6 million in online sales in its first year. Just two weeks ago, on single, typical weekday for online sales in the country, Coupang raked in more $12 million.
Now Coupang—arguably the fastest-growing major e-commerce company in the world—has a substantial influx of cash to continue its expansion. The company, founded by Harvard business school dropout Bom Kim, just raised $300 million in a funding round led by BlackRock Private Equity Partners, bringing Coupang’s total funding to $480 million.
Coupang claims to be the largest direct-to-consumer e-commerce entity in Korea. Today, the annual value of goods sold via Coupang is tipping $2.2 billion, Bom Kim, founder, CEO and chairman of Coupang tells Internet Retailer.
“We think of ourselves as the Amazon of South Korea,” Kim says. “We have half a billion in cash in the bank and we sell more diapers than any store (online or bricks-and-mortar) in South Korea.” Indeed, if a South Korean needs it, Coupang sells it—from car seats to laptops to belly button lint removers.
Similar to Amazon,Coupang both sells items directly, typically higher-priced merchandise, while also allowing other merchants to sell mostly less expensive products on its web site.
Kim says the company has achieved its rapid growth by exploiting the country’s lightning-fast Internet service, South Korean consumers’ affinity for mobile devices and by fulfilling orders quickly and efficiently.
From the get-go, Kim says, Coupang focused on mobile more than desktop—creating a rich mobile site and app that was easy to use and fast to respond. Today, 70% of sales and 80% of traffic comes from mobile devices—mainly through Coupang’s app, Kim says. The Coupang app has been downloaded 19 million times, suggesting as many as one out of every three South Koreans may have tried out the app. Many of them are buying. Coupang booked $1 billion in mobile gross merchandise volume over the past year.
South Korea is a prime location for an online seller—especially one focused on mobile. The country’s wireless web speed is the fastest in the world—clocking in on average at 23.6 megabits per second as of Q1 2014. That’s nearly 62% faster than Japan’s, which ranks No. 2 in Internet speed at 14.6 megabits per second, according to Akamai Technologies, operator of a global content delivery network for web site operators. What’s more South Korea’s average mobile Internet speed is higher than Japan’s traditional Internet speed: 14.7 megabits per second.
“In Korea, people are streaming HD video on the subway,” Kim says, “So, people’s expectations for mobile are high.”
Coupang has invested in giving demanding consumers instant or at least very fast gratification not only by focusing on mobile commerce but also by building a fulfillment infrastructure that can deliver most goods within a few hours after a shopper places her order. Coupang has five fulfillment centers in South Korea, with more under construction, Kim says. It operates its own fleet of delivery vehicles—each one driven by what many South Koreans refer to as the Coupang Man, complete with his own uniform.
“We have integrated all our fulfillment centers, using state-of-the-art technology,” Kim says. “We’ve had several-hour deliveries since the beginning of the year and we will be fully national with it by the end of the year. We’ve focused on immediate gratification by integrating everything from the moment you click and getting it to you within hours.”
There’s plenty of room for growth in e-commerce and m-commerce in South Korea, Kim says, and the company plans to stick to its home market, at least for now. “E-commerce is still a very small percentage of total sales,” Kim says.
Coupang is, however, reaching across borders to recruit technology talent. It has U.S. offices in Silicon Valley and Seattle and another in Shanghai, and plans to use the new cash infusion to tap tech expertise in those areas to grow its South Korean business, Kim says.
While Kim says Coupang has no immediate plans to sell into other countries, Jay Park, managing director of lead investor BlackRock Private Equity Partners, hinted otherwise in a statement announcing the funding.
“(Coupang’s) differentiated same-day service model, deep mobile expertise, and precedent-setting online commerce offering, makes Coupang an e-commerce leader to watch—not only in Korea but globally,” Park said.