Businessmodel of Coupang

Customer Segments

Coupang operates an ecommerce platform that serves members of the general consumer market. As a technology-based company, its online platform attracts younger, more technologically inclined consumers, notably younger generations such as millennials.

While the Company offers products from a broad range of product categories, with a view to attracting customers from multiple demographics, some reports have suggested that the Company has aggressively targeted mobile-savvy, young mothers by offering baby products, such as diapers, at low prices.

Coupang currently operates solely in South Korea, where women have been reported to account for around 60% of all transactions. The Company also has offices in the US and in China, with plans to expand its services to an international client base.

Value Propositions

Coupang provides value to its customers in the following ways:

• Its efficient delivery service, with the Company operating its own in-house distribution and delivery teams, as well as a network of fulfilment centres, that enable it to complete deliveries of various products within a few hours of ordering;
• Its broad range of products, with the Company offering a large catalogue of products to its customers, spanning categories such as baby products, fashion and apparel, beauty products, consumables, home goods and decor, books and toys, sporting goods, electronics, and tickets for travel and cultural events;
• Its low process and discounts, with the Company offering products at affordable prices and providing regular discounts and deals that enable customers to make further savings;
• Its accessibility and flexibility, with the Company operating an effective and efficient mobile sales platform, which accounts for the bulk of its sales, as well as a desktop webstore, where customers can receive tailored product recommendations;
• Its high-quality customer service, with the Company providing customer care seven days per week and providing various forms of compensation in cases of customer inconvenience, including delays in delivery and absence of stock. ### Channels

Coupang operates a website at www.coupang-usa.com, through which it provides information on its activities, locations, and services. The Company also operates an online portal at www.coupang.com, through which customers are able to browse deals and products, place orders, and arrange deliveries of items. Around 75% Coupang’s sales, however, come through its mobile applications for iOS and Android, with South Korea’s successful smartphone market and its high-speed internet services combining to make mobile commerce more efficient.

Instead of relying on third-party carriers, Coupang operates its own distribution and logistics network, which enables it to make deliveries more quickly and efficiently. This includes a number of warehouses, distribution facilities, and fulfilment centres across South Korea, as well as the Company’s team of delivery drivers, known as Coupangman.

Customer Relationships

Coupang operates an entirely self-service retail operation. Customers are able to browse products, manage account details, place orders, and arrange deliveries independently through the Company’s mobile applications, as well as through its mobile and desktop websites, without interacting with members of the Company’s personnel.

Coupang provides ongoing care to its customers, with customer service representatives available to handle queries and complaints every day of the year. These customer service representatives can be contacted over the phone or online, and have the authority to offer various compensations for customer inconvenience. The Company has also implemented its WOW Campaign to express its appreciation for customers, providing a range of gifts, such as handwritten letters, and personally raised potted flowers, with a view to establishing trust and long-term relationships with its customer base.

In addition to providing personalised customer care, the Company makes a range of support resources available through its website, including shipping and distribution information and FAQs. Customers are also able to interact directly with the Company through its social media accounts, including with Facebook, Twitter, and LinkedIn.

Key Activities

Coupang is a Korean ecommerce company. It operates an online retail platform through which it sells a range of products, spanning categories such as baby products, clothing and accessories, health and beauty products, consumables, homeware and furniture, books, toys and games, sporting equipment, consumer electronics, and tickets for travel and cultural events.

The Company operates its own delivery and distribution infrastructure, including warehouses, distribution centres, and fulfillment centres, as well as its Coupangman team delivery drivers. The Company aims to complete delivery of most products to customers within a few hours of ordering.

Coupang makes the majority of its sales through its mobile applications for iOS and Android. The Company currently only serves customers in Korea, but has plans to expand its service internationally.

Key Partners

Coupang works closely with a range of companies in order to provide and efficient and reliable service to its customers. These partnerships can be categorised broadly as:

• Supplier Partners, comprising suppliers of products and items that are subsequently resold to consumers through the Company’s online and mobile platforms, including exclusive retail partnerships with certain brands;
• Vendor Partners, comprising suppliers of tools, resources, and services that support the Company’s own sales and distribution activities, including companies to which certain functions can be outsourced;
• Technology Partners, comprising a range of technology, software, and systems integration companies that assist in the development and maintenance of the Company’s digital platforms and internal IT infrastructure; and
• Strategic and Alliance Partners, comprising various companies and organisations with which the Company shares resources and collaborates on joint projects. Coupang recently launched an exclusive online retail partnership with The Honest Company, a US baby product and household goods maker founded by actress Jessica Alba, to market the latter’s goods in South Korea. The Company has previously partnered with girl group After School to sell their albums online.

Key Resources

Coupang’s key resources are its catalogue of products and supply chain, its mobile and online platforms, its intellectual properties, its IT and communications infrastructure, its logistics and distribution infrastructure – including its fleet of delivery vehicles, its sales and marketing channels, its partnerships, and its personnel.

Coupang owns and or leases a network of properties both in South Korea and abroad. This includes the Company’s domestic network of warehouses, fulfilment centres, and distribution centres, as well as its offices in Seoul, Seattle, Silicon Valley, Los Angeles, and Shanghai.

While the Company operates a technology platform, searches of records published by the US Patent and Trademark Office and by the Korea International Property Rights Information Service identified no patent applications filed in Coupang’s name.

Cost Structure

Coupang incurs costs in relation to the procurement of supplies and resources, the development and maintenance of its digital platforms, the maintenance of its IT and communications infrastructure, the operation of its logistics and distribution infrastructure – including the purchase of fuel for its delivery vehicles, the operation of its marketing and advertising programs, the management of its partnerships, and the retention of its personnel.

Coupang’s largest costs relate to cost of goods sold. The Company also incurs occupancy costs in relation to its international network of offices, and incurs substantial costs in relation to the payment of salaries and benefits to its workforce.

Revenue Streams

Coupang generates revenue through the sale and delivery of products across numerous categories – including electronics, homeware, toys and games, books, and baby goods – through its online and mobile ecommerce platforms. The Company makes the majority of its sales, around 75%, through its mobile applications.

Coupang is a privately-owned company and as such is not obliged to publish its financial results online. The Company, however, was reported to have generated net revenue of around KRW 868 billion (approximately $782 million) for the first six months of 2016. It is reported to be continuing its revenue growth.