Those growth rates are stellar for a stock that trades at just 1.6 times this year’s sales. Korea’s largest online retailer reported net revenue of $6.2 billion for the September quarter. Coupang’s logistics investments have paid off, as 99.3% of orders placed on its site are delivered within one day, the company said. Coupang now delivers 3.3 million items each day, up from an average of 2.2 million units per day at the end of 2019.
Coupang has leveraged its vast ecommerce business to expand into related sectors including meal delivery, online grocery fulfillment, payment processing and digital advertising. These new business segments have largely been successful, but altogether they accounted for less than 10% of total revenue in 2020. While the frequency will push up your total spend, the margin on all of that may decrease, because you are buying stuff that’s very small, because you’ve paid for the service. I’m not saying that I’ve ever done this, but I can easily see someone just buying one item for delivery in the morning and doing that day after day, after day. Overtime that can hurt the operating margin of a business like this. It would be nice in future quarters to see the breakout of that spend.
- Looking ahead, analysts expect Coupang’s revenue to rise 26% in fiscal 2022 and increase 24% in 2023.
- Kim decided to drop out of Harvard Business School to start a digital commerce company in Korea.
- However, you don’t want to dive into a potential Coupang IPO with the blinders on.
- Coupang, which purchased Farfetch alongside its long-term partner, the San Francisco-based firm Greenoaks Capital, is a Fortune 200 company listed on the New York Stock Exchange.
- On top of the basic e-commerce business, the company has multiple avenues for expansion, including advertising, premium video (to be added to the subscription service), Coupang Pay, food delivery, and grocery delivery.
The company quickly raised $300 million in 2014, largely from U.S. investors, followed by $3 billion in 2015 and 2018 from SoftBank. Those investments allowed Coupang to balloon into a 50,000-employee business in 11 years. The trucks and the operation belong to Coupang, a start-up founded by a Harvard Business School dropout that has shaken up shopping in South Korea, an industry long dominated by huge, button-down conglomerates. Coupang, a start-up founded by a Harvard Business School dropout, helped transform e-commerce in South Korea, one of the world’s fastest-growing markets for online shopping. Net other revenue also includes consideration from online restaurant ordering and delivery services performed by Coupang and advertising services provided on its apps or websites. Coupang has built a business model to address these tradeoffs and transform the customer experience.
In response, the company has developed a business model focused on creating an integrated technology and infrastructure system to enhance the customer experience. Like its North American brethren, Coupang has a premium subscription service called Coupang Wow with about nine million members. On top of the basic e-commerce business, the company has multiple avenues for expansion, including advertising, premium video (to be added to the subscription service), Coupang Pay, food delivery, and grocery delivery. For example, the Rocket WOW membership program that was introduced in 2019 provided customers with unlimited free shipping, Dawn Delivery, Same-Day Delivery, free returns for 30 days, and Rocket Fresh groceries.
Coupang has a fleet of delivery drivers
To be successful, existing and new entrants must appreciate Korea’s demanding consumer preferences. For online offerings, this extends to building and tailoring an e-commerce solution surpassing innovation in other mature retail markets, such as the United States. Looking ahead, analysts expect Coupang’s revenue to rise 26% in fiscal 2022 and increase 24% in 2023.
Coupang’s marketplace attracts a large number of merchants, including small- and medium-sized businesses, which enables it to obtain a wide and unique selection of merchandise. This helps high-quality merchants compete holistically on the overall customer experience. This results in lowering barriers to entry for merchants and improving the customer experience, encouraging repeat purchasing and generating higher sales for merchants. Korea is the fourth largest economy in Asia and the twelfth largest globally as of 2022, with a gross domestic product (“GDP”) of $1.8 trillion and GDP per capita of $32,730.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. However, you don’t want to dive into a potential Coupang IPO with the blinders on. But fundamental sustainability is still an important discussion here. So, if you decide to play – when you’re able to play – do so carefully. Put another way, even with the advantages of high-density drop-off zones and utterly dominating the home market, it’s badly losing money. That wouldn’t be a problem initially but, Korea being a relatively small market, if Coupang doesn’t have a viable international roadmap, these mounting losses are worrisome.
Although Coupang sounds like one of the richest companies in the world, the overhead and debt costs take down the bottom line of revenues. When sales jumped sharply toward the end of the year, the net loss was taken down substantially to https://traderoom.info/ $567.6 million. Big losses in any quarter are a part of the operation of larger companies. When looking at an unprofitable business like Coupang, I like to estimate what revenue and gross profit could look like five years from now.
Why you should know about Coupang
In Q3 of this year, revenue per active customer hit $276, up 23% year over year, a big contributor to Coupang’s overall revenue growth of 48% in the period. Coupang has been on the move with a forward trajectory practically since its inception. As a part of its expansion of goods and services, it purchased a company called HOOQ. When Coupang completed the acquisition, it developed its streaming service that it calls Coupang Play. This added yet one more interesting element to the products and services it offers its customers. When a company reaches a valuation of at least $1 billion it is listed as a part of the exclusive unicorn group of companies.
The statistics for Coupang show that it’s a good investment option and there are no signs that the company will do anything but continue to grow and prosper in the near future. It is classified in the internet and e-commerce industry providing retail sales, along with technology, IT, customer service, and operations. In the fourth quarter of 2021, revenue grew 34% year over year to over $5.1 billion. As you can see, this business is already quite large and growing rapidly. In fact, it now has an estimated 15.7% market share in its home country, up from just 7.4% in 2017. In its short life, Coupang — which started as a kind of Groupon for South Korea before expanding to an e-commerce marketplace within its first three years — upended competition in the country.
Coupang continues to grow in a post-lockdown market
For additional information on other potential risks and uncertainties that could cause actual results to differ from the results predicted, please see our most recent Annual Report on Form 10-K and subsequent filings. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. So far, Coupang has done an exceptional job of providing fast deliveries for its customers. We learned that the major headquarters in Seoul is the main hub, but there are the fulfillment and logistic centers in more than 30 cities throughout the region. Next-day delivery is guaranteed for every order that is placed before midnight. A fleet of 15,000 drivers work to make sure that all the deliveries are made quickly.
Frasers has since bought Matches, another fashion e-commerce company that saw its valuation plummet due to tighter fiscal controls in the U.S. and Europe. On Wednesday, Coupang did not specify whether there would be any job losses, but sources familiar with the company said it is keen to retain current management, including Neves. Second, Coupang stock needs to be tied to an international narrative at some point. Because here’s the deal – the company is burning cash like Samuel L. Jackson’s favorite word.
Is Coupang Stock a Buy Now?
In 2021, Coupang expanded its total infrastructure by 15 million square feet, representing more expansion than its previous two years combined. But over the long term, it could rein in its spending as economies of scale kick in. Analysts expect Coupang’s revenue to rise 24% for the full year, and to grow another 25% in 2023. traderoom Based on those expectations, Coupang trades at less than one time this year’s sales. Coupang has completed its purchase of Farfetch and said a fresh $500 million in capital should keep the company running smoothly. It did not update on potential job losses, or the sale of noncore assets such as Browns and New Guards Group.
The response was overwhelming with a total of $4.55 billion raised at its initial public offering. This will provide Coupang with the additional revenue to continue its expansion beyond South Korea into other parts of the world if this strategy fits into its strategic planning. While some other companies are disappointed by their initial public offering results, Coupang did much better than it expected. The company is also currently working on Coupang Pay internally and they also have a food delivery service called Coupang Eats. In just the last year, Coupang has expanded to become much more than an e-commerce business.
If you’re like the founder of Korean e-commerce behemoth Coupang, Bom Kim, you shouldn’t wait around for a fancy graduate degree if opportunity strikes. Less than a decade since dropping out, Kim has turned his company into South Korea’s most valuable startup. Not surprisingly, there’s much anticipation for an initial public offering of Coupang stock. Prior to founding Coupang, Kim interned at the New Republic, worked for Boston Consulting Group and launched a magazine geared toward Harvard alumni. Kim decided to drop out of Harvard Business School to start a digital commerce company in Korea.
