There was no such company … Coupang’s Bold and Scary Mission Park Dong-hui Consumer Report

The “mission” Coupang pursues is bold and terrifying. “Creating a world we think we would have lived in without Coupang” is the goal of Coupang executives and employees, including founder Kim Bum-seok. It also means that it is difficult to define Coupang only with the framework of electronic commerce (electronic commerce) that sells products online and delivers them quickly to the front of the house. On the 24th, Coupang launched ‘Coupang Play’ and officially entered the OTT market (content that provides service over the Internet). The focus is on how far the evolution of Coupang will go.

◆ OTT breakthrough, unexpected quiet start

Coupang Play, which was introduced by Coupang that day, is evaluated as an additional service for Wow members, which is a paid membership (2,900 won per month). Paid members with more than 5 million people can view various content provided by Coupang Play for free, in addition to existing free shipping and returns. Another advantage is that it can be viewed by up to 5 people with one account.

It is cheaper than Netflix (about 3.6 million members), which can be watched by up to 4 people a month for 14,500 won (premium service), but is generally rated lower than Netflix in terms of content diversity. Even Coupang himself said: “The beginning is weak.” In the IT (information technology) and content industries, Coupang is interpreted to have chosen a strategy of leveraging the stone bridge rather than a “splendid start.”

It could attract attention when faced with great fish-class content on Netflix, but it was said that it was determined that if the service did not run smoothly due to a sudden spike in usage early on, it would be more profitable than profits. A content industry official said: “Coupang is in negotiations with major content creators (CPs), including broadcasting rights for sports such as the major leagues.” A Coupang official said: “We will display content that cannot be viewed on other OTT services, such as the latest American television series starring Brian Cranston,” Your Honor, “and” CNN10 “educational news content.

Experts say that Coupang’s entry into the OTT market will be a weapon in addition to expanding WoW membership. Trying to expand Coupang’s territory abroad, it is possible to enter the e-commerce market with Coupang Play, which includes content K. Coupang acquired Southeast Asian video streaming company ‘Hooq’ in July to establish an OTT platform.

It will open the way to move towards the new concept of distribution market that combines content and commerce. This means that it is possible to market both tangible and intangible content owned by so-called ‘influencers’ who have high influence on the public, such as Hallyu stars and famous YouTubers, so that they can be marketed on the platform called Coupang. There is a high possibility that Coupang will compare Much Buy Amazon’s model, which sells its own designer products through a POD (print on demand) method.

◆ “Coupang is an unprecedented kind of company”

The point to watch for the future is how far the Coupang service will evolve. Coupang started out as a social commerce company (Coupang was short for ‘Coupon is Pangfang’) with Timon and Wemake in 2010, and emerged as an e-commerce powerhouse that threatens large offline distribution companies like E- Mart.

By creating more than 170 logistics facilities across the country, the ‘rocket delivery’ took place daily. Thanks to this, Coupang’s sales increased annually, which was just 3.484 billion won in 2014, and recorded 7.153 billion won last year, just five years later. With the explosion of e-commerce due to the new coronavirus infection (Corona 19), sales are expected to reach 10 trillion won this year.

Despite such growth, the look towards Coupang is extreme. An official at a large retailer said: “There is no company that can survive with an annual loss of trillions,” and said: “Coupang will be difficult to survive without receiving external funds through additional investment or listing.”

There are also many critical opinions about the ‘Amazon Trail’ that Coupang is going to go to. ‘Amazon has also avoided the deficit, but its annual profit is much lower than that of other IT companies such as Google’ and ‘There are few successful cases of Amazon expansion abroad’.

However, it is not easy to point out that Coupang or Amazon should not be seen as a framework for analyzing existing companies. One IT expert said: “If you look at Amazon’s yield (profit) curve, it has hardly changed for several years. It is correct to see that it is adjusting ”. It is an analysis that has deviated from the conventional notion that the objective of a company is to produce greater profits than the previous year.

Organization that fosters new business challenges

Coupang’s evolution can also be interpreted in the same context as the Amazon Way. Despite the deficit for many years, Coupang constantly challenges new business. A representative example of Coupang’s defiant spirit is running a PO (product owner) job, also known as a ‘mini CEO’.

Approximately 80 OPs are responsible for presenting ideas for new businesses or improving the functions and performance of existing businesses. While large corporations generally create separate organizations as new business teams to discover new business, Coupang places OP in each department and discovers new business based on the field.

When an idea is adopted, POs are assigned the necessary resources for commercialization, as developers, and operate as CEOs. Coupang Play is also PO, director Kim Seong-han, who is in charge of the practice. A Coupang official said: “Coupang does not have an annual business plan or regular greetings at the end of the year” and said: “I will continue to take on new challenges so that I can think about how I would have lived without Coupang.”

◆ Autonomous delivery is the future goal

It can be seen from the perspective of a new business that Coupang invested around 300 billion won this year alone in connection with the COVID-19 quarantine. It is an investment on a scale that cannot be easily made solely for fear that the spread of an infectious disease from the distribution center will affect corporate credibility. If it is a regular business, it is very likely that this money was used to cover the deficit.

Considering that Coupang is an IT services company with more than 2000 IT engineers, experts note that you can understand the meaning of the investment. It is an inference that providing business solutions related to IT security, including quarantine, can become a new business for Coupang.

Coupang’s trillion-dollar deficit, while continuing to build logistics facilities and direct operation of delivery vehicles and delivery engineers, can be interpreted from the concept of future investment. In the same vein, Uber’s CTO (Chief Technology Officer) Tuan Pam was hired as his CTO.

In the IT and distribution industry, Coupang is believed to constantly accumulate data to build a delivery system based on autonomous driving. Uber’s new CTO said of the reason for the switch to Coupang: “It is an experience that no one can do to challenge the AI ​​vehicle dispatch system in a dense city like Korea.” Softbank Chairman Son Jeong-eui, who has invested $ 3 billion in Coupang, has also formed an alliance with Uber and Alibaba.

Reporter Park Donghui [email protected]