June is already looking like a big month for SoftBank . Just days after upping its stake in billion dollar gaming startup Supercell, the Japanese telecom giant revealed it is investing a cool $1 billion in Korea’s top e-commerce firm Coupang.
Coupang, which is roughly ‘Korea’s Amazon’ for those who like East-to-West comparisons that don’t quite fit, raised a lot of money last year. Sequoia put in $100 million in May at a $1 billion valuation, while Blackrock added $300 million more in December.
Neither Coupang nor SoftBank confirmed a valuation, however a source close to the deal told TechCrunch that the round values the Korean company at $5 billion.
One Billion Dollars
With this investment, Coupang has joined a small circle of companies with valuations over $1 billion. And an even smaller group (Xiaomi and Flipkart) to have raised $1 billion in a single round. So what is it about the company that makes it so attractive?
Coupang and its business are the next-level if you study online retail in Western markets. The company’s apps have picked up 25 million downloads — which is a lot given Korea’s 50 million population — while mobile accounts for 75 person of its revenue, and 85 percent of total traffic to the service. (For reference, Amazon said 60 percent of its shopper activity came from devices during Christmas 2014 — a peak time for spontaneous shopping on a mobile or tablet.)
Customer engagement is just one area where Coupang is blazing its trail, the company has its own logistics network and fulfilment centers — not to mention ‘Coupang men,’ its last-mile fleet of trucks and drivers.
The company initially relied on third-parties to complete its deliveries, but Coupang Men were introduced to boost its brand and interactions with customers. In addition to delivering goods, they routinely dish out freebies — including candy and samples — and will write thank you notes to Coupang customers too.
Beyond a customer-service focused delivery system — which the company claimed has helped more than triple its monthly revenue over the past six months — Coupang is also fast to deliver. Very fast.
It has offered same-day delivery (or delivery within hours) since early 2014. This new funding and SoftBank’s support, the company said, will “fuel innovations” within its fulfillment and delivery services, as well as its mobile apps. With that in mind, the company plans to pour (yet) more resources into its R&D centers, which are located in Silicon Valley, Seattle, Shanghai and Seoul.
“Coupang is one of the fastest-growing and most disruptive Internet companies in the world. [It] is setting a new standard for how e-commerce can and should be done across the globe with its innovative technologies and approach to same-day delivery, mobile commerce, and customer service,” said Nikesh Arora, the former Googler who is vice chairman at SoftBank, in a statement.
Coupang founder and CEO Bom Kim told TechCrunch that, though the company raised $1 billion, it still has significant cash in the bank. He also believes that there’s a lot more to come.
“The global e-commerce industry is still at such an early stage,” he said in an interview. “We have a chance to build a next-generation company — one of the great companies — and this investment allows us to make bold investments in both mobile and logistics.”
Investing Across Asia
The huge deal is a continuation of SoftBank betting on top performing e-commerce companies across Asia. The telecom giant backed Indonesian site Tokopedia to the tune of $100 million last year and led a $627 million round for Snapdeal, a rival to Amazon in India.
It has also invested large sums in taxi apps across the Asian region. Southeast Asia’s GrabTaxi netted $250 million from SoftBank, which led a $210 million investment in Indian Uber rival Ola, and was the lead in a $600 million raise for Did Dache in China. (Which has since merged with arch rival Kuaidi Dache via a billion dollar deal.)
SoftBank is tapping its global network and contacts to help all these companies develop, and that will also be the case for Coupang.
“We welcome SoftBank as a long-term partner and look forward to leveraging their global expertise and vast network to further accelerate our growth,” Kim said.
Despite international partners under the SoftBank investment umbrella, Kim confirmed that Coupang isn’t looking to expand internationally. For now, at least.
“We think globally, but we’re laser-focused on Korea,” he said. “We have big ambitions. We want to build a next-generation commerce model.”