Coupang is an interesting company because of its rise and overall growth. Can it grow? Can it become profitable? Does it actually have threats due to the hostile neighbor to the north? Let us take a look at it.
The company notes that the overall e-commerce segment in South Korea should grow to at least $290 billion in sales over the next few years.
It notes that by 2025 the ecommerce segment should be quite large and that it is only a small portion of what that market should become.
Coupang’s revenue in 2020 was $12 billion.
The firm notes that it offers lower prices to customers over competitors, similar to Amazon in its early days. If it is able to keep those prices competitive, it retains customers by establishing habits, making it the company of choice, or the default firm over time.
An Array of Services
Coupang offers an array of e-commerce services and has rolled out product offerings like Coupang Eats.
Coupang Eats lets customers order food from local restaurants, giving Coupang another touchpoint.
The company seeks to offer an array of services, like fintech, to new geographic markets. Coupang is presently in Japan and is rolling out services to Taiwan.
Infrastructure Investments Are Supposed to Pay Off
The key point of the company is that it notes that it will continue to invest in technology, logistics, automation to optimize its supply chain and overall processes.
At the same time, it will seek to roll out more offerings that help to keep customers. These offerings may be an expansion of WOW streaming (Coupang Play), Fresh (grocery delivery), Eat (restaurant service).
Solve Problems To Create Better Customer Experiences
“Don’t start with what looks easy, we work backwards imaging jaw-dropping customer experiences and we embrace the hard work necessary to challenge trade-offs that customers take for granted.”
To that end, the company notes that it will focus on technology, process innovation, and tap into economies of scale to bring about fantastic customer experiences. This will drive operating leverage and enhance cash flows over time.
In that line of thinking, the company notes that it will prioritize growth and long-term cash flows.
Further, to continue to innovate, the company notes that it will have small experiments that require little capital, then test and iterate with intensity.
If they are able to do the above by being disciplined capital allocators, then they have the ability to be leaders.
One important note here is that the firm loses over 900 million dollars per year. It does have over 2 billion on the balance sheet but they will have to issue debt or obtain more investment to sustain operations.
Coupang Seeks to Emulate the Best and Be Better
If the company can continue to grow and capture a portion of the growing e-commerce market each year, it could have good growth potential. If it does have the infrastructure in place to service customers, does have a strong brand presence, and can lower cost to operate over time, it can be a viable business.