The E-commerce giant Coupang, also known as the Amazon of South Korea, is one of the most successful E-commerce giants in Asia. But this wasn’t always the case, it initially started off as a Groupon clone, selling discounted products in a sort of window style shop. Yet, through aggressive marketing tactics, the customer base grew exponentially. When one of the biggest tech investors (Softbank) noted the potential, it partnered up with Coupang. This way, it provided Coupang with both experience and funding to eventually become the 12-billion-dollar E-Commerce giant it is today. But what makes this E-commerce giant so special?
Just like most E-commerce businesses, the platform forms the basis of the company. Generally, an advantage of a platform is that it enables significant economies of scale and sell more other products and services to customers. And Coupang is utilizing this potential to the maximum. The significant economies of scale are primarily enabled by their own distribution network, as Coupang has more than 200 warehouses in South Korea. Furthermore, it has its own delivery service. This allows Coupang to also sell normal and fresh groceries through the originally non-food consumer goods distribution network. In theory, this could provide Coupang significant costs advantages. Additionally, because Coupang has so many customers, they started to offer even more services like a fresh food delivery service and video streaming service, maximizing the number of services and products they can sell through their platform.
To conclude, the way Coupang started by only selling discounted non-food consumer goods and grew to the company it is today feels like a textbook example of how to maximize value from an online platform. The online platform provided Coupang with enough revenue to justify the building of its own distribution network. The distribution network then made it possible to sell groceries to the same customers. And with many people doing daily shopping on your platform, services like food delivery and online streaming will almost automatically get more attention.
References:
https://www.economist.com/business/2021/02/18/coupang-hopes-to-be-the-next-successful-baby-amazon
