Widely known as the “Amazon of South Korea”, Coupang has firmly established itself in the lives of many Koreans becoming the biggest online marketplace in the country and its third-largest employer since it was founded in 2010. In this blog, we share why brands looking to tap into the South Korean market should consider selling on Coupang.
South Korea’s growing economy
The South Korean ecommerce market is estimated to have grown by 22.3% in 2020; and could be worth as much as US$142 billion by 2024, making it an attractive market for international brands. In addition, South Korean online shoppers are extremely well connected; and spend the most online per person of all shoppers in the Asia Pacific region. For this reason, the percentage of retail sales that are online is already at 16%. An investment push by the government is designed to increase this further.
Coupang: South Korea’s biggest online marketplace
More recently, Coupang had a highly successful IPO in the USA, raising $4.6 billion. Its growth strategy for the next few years includes attracting more customers, increasing customer engagement, and growing its product selection.
The marketplace grew quickly in 2020, with 14.8 active customers reported in the final quarter of 2020, up from 11.8 million in the same quarter of 2019. Net revenue per customer also increased in this time, up by 59% to $256 for Q4 2020. Much like Amazon, Coupang is focuses on offering a broad selection at the lowest prices available in the market.
It has built its own end-to-end infrastructure including logistics and technology, which has allowed it to differentiate its offer and maximise efficiencies. To stay one step ahead of competitors, Coupang has also invested heavily in convenience, particularly around speed of delivery and ease of returns.
How international brands can start selling on Coupang
While 70% of merchants on the marketplace are small businesses, it is also a channel to market for larger international brands, including LEGO, Gap and Nature’s Way who have all begun selling on Coupang. It stocks both its own inventory as well as allowing third parties to sell on the platform.
Coupang’s profile has increased significantly outside of South Korea in the last couple of years. In late 2019, it launched a global partner programme to help international brands enter South Korea using the platform; this included the opening of international warehouses, such as one in California where US brands can store goods to be sold cross-border.
Pattern runs a market ranking exercise for the brands we partner with, to determine which APAC markets and marketplaces are the best fit for their brand and provide the most opportunity. Factors we consider include, product suitability, existing cross-border sales, brand awareness, local competition and the cost of acquisition marketing to drive sales. This type of analysis can help a brand to determine whether there is a significant enough opportunity in South Korea worth the investment in getting set up to sell of Coupang.
If you’re interested in selling on Coupang - or want to discuss how we could help to grow your Asia Pacific online sales acting as your authorised trade partner for marketplaces in the region - contact us here.