Some say you can pay any price for a great company, but was Coupang at $100bn too high? Well, one things for certain: You wouldn’t have paid that for what it started out as. It started out as a money losing Groupon clone that stemmed losses by pivoting to an eBay model, but failed to develop beyond a mediocre business. Bom Kim recognized he had to stop emulating what was easy and took on what no on thought possible: he wanted to out-Amazon Amazon.
They built out their own entire logistics network and stocked their warehouses with the largest 1P selection in Korea. They made delighting the customers their ethos and didn’t shy away from hiring all of their own drivers to speed up delivery times. Forget single day delivery, Coupang now delivers orders placed before midnight by 7am the next morning.
And unlike other markets, Coupang was a last-mover, starting over a decade after their biggest competitors, winning over consumers only after investing in the full consumer experience. Their consumer lock-in is born from years of near perfect buying experiences. The real friction to buying online is consumer trust, and they have totally earned it. From realizing you need something to getting it delivered is now a <1 minute process.
While most leading global ecommerce companies are ceding market share, Coupang is taking it.
So can you pay too much for a quality business?
Well, that’s going to be in part a byproduct of the growth runway. While Korea is ahead of the world in ecommerce penetration, their 0% population growth could prove to be a limiting factor… However, there are other market and businesses that Coupang is exploring. We’ve heard about food delivery, but what about quick commerce? Could this be the Trojan Horse for geographic expansion in the competitive Asian markets?
Well, maybe this won’t be the philosophical debate of how much you should pay up for quality though, because the stock is down over 50% from its peak.
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