Coupang founder and CEO Bom Kim. Photo by JAE-HYUN KIM for "Forbes"
Update: After the market closed on Thursday, Coupang reported $49.25, and Bom Kim's wealth fell back to $8.6 billion.
On Thursday, South Korean e-commerce giant Coupang's stock was listed on the New York Stock Exchange, and Bom Kim, the company's founder and CEO, reaped huge fortune. The stock opened at a price of $63.50, far exceeding its IPO price of $35, and Coupang's market value reached an astonishing $109 billion. The IPO price has been raised from the issue price range of US$32 to US$34 per share, higher than the initial US$27 to US$30 range.
Kim's 10.2% stake is now worth 11.1 billion U.S. dollars, which is more than ten times more than the pre-IPO wealth of 1 billion U.S. dollars. This windfall made the 42-year-old Kim the third richest person in South Korea, surpassing Samsung Electronics vice chairman Jay Y. Lee and Hyundai head Mong-koo Chung.
Through the IPO, Coupang raised US$4.6 billion in initial capital, becoming the largest listed company in the United States this year and the largest listed company in Asia after Alibaba in 2014. The Seoul-based company is now South Korea’s most valuable startup, with a market capitalization that is twice that of the search engine Naver (market capitalization of $54 billion).
Coupang currently only operates in the South Korean market and has achieved great success. Almost everyone in South Korea's 52 million people owns a smartphone with high-speed Internet access. In 2010, Harvard graduated Kim founded Coupang with a business model similar to Chicago-based Groupon. Since then, Coupang changed its business model to South Korea's Amazon or Alibaba.
In 2015, early investors such as BlackRock and Sequoia Capital injected US$300 million in Coupang, followed by companies such as SoftBank inject another US$1 billion. With sufficient funds, Coupang was able to increase inventory and focus on fast delivery.
In 2018, Coupang raised US$2 billion from SoftBank’s Vision Fund and accelerated its expansion in South Korea. This startup company, which has only been established for 11 years, has become a gem in Softbank’s investment portfolio; according to Pitchbook data, the 33.1% stake held by the Vision Fund is currently worth nearly 37 billion U.S. dollars, surpassing its holdings in Uber or DoorDash. share.
According to the prospectus, Coupang will establish a special fund for the proceeds from the issuance, which will be used to strengthen its business and acquire and invest. The company currently has more than 100 distribution centers and 15,000 full-time drivers in 30 cities. This allows Coupang to guarantee that orders before midnight will be delivered the next day. According to the company, 70% of South Koreans live within 7 miles of the Coupang logistics center.
Image source: COUPANG
Coupang now occupies nearly 25% of South Korea's US$115 billion e-commerce market, surpassing the websites of established retailers such as Gmarket, Rakuten, Shinsegae, etc. under Ebay. The main difference is that a transportation is outsourced to a third-party company, and it has its own transportation fleet. Kim said: "South Korea still has a lot of room for growth".
According to Goodwater, Coupang has surpassed Wal-Mart, Etsy, Alibaba, etc. in terms of revenue retention (the change in spending after consumers first buy a product). Moreover, it also defeated Amazon. In 2017, Coupang users spent 350% higher than Amazon in the fourth year (2020), while Amazon's consumption was 280%.
However, maintaining market leadership also faces challenges. In March last year, in Ansan, the southern city of Seoul, a temporary contract worker died during the handover, and Coupang faced scrutiny; in October last year, a 27-year-old male working in the company’s logistics center in Daegu shortly after finishing the night shift death. The company denied that these deaths were caused by overtime, saying that its working hours were less than the national legal maximum working hours for full-time employees. An investigation by the Korea Workers ' Compensation & Welfare Service ruled that the death in October was related to work; Coupang issued an apology statement, acknowledging the verdict, and said it would actively compensate the deceased Family members. Last Sunday, a delivery driver in Coupang passed away, but he was not on duty at the time.
The Korean Public Service and Transport Workers' Union (Korean Public Service and Transport Workers ' Union) attributed the death to Coupang's fast-moving transportation system, which caused long working hours and high demand. Earlier this week, the "Financial Times" reported that in the past year, 8 employees of Coupang died due to poor working conditions. The reason behind this was that the degree of automation was lower than other e-commerce giants. A spokesperson for Coupang did not respond to a request for comment.