Harvard dropout Kim Bom’s daily deals start-up Coupang made Korean tech start-up history in June when it fetched $1 billion from SoftBank in the country’s largest-ever Internet investment.

Coupang is Korea’s prized unicorn, and perhaps SoftBank’s as well: After hooking bargain hunters with Groupon-type daily discount promotions and beating out its local rivals as the go-to source for cheap deals, the Seoul-headquartered start-up transformed itself into an e-retailer, raking in over 200 billion won ($170 million) in monthly revenue last year to account for nearly half of the local social commerce market.

Alex Kim, a director at SoftBank Ventures Korea, which facilitated the funding deal for its parent company in Japan, said that even if global giants like China’s Alibaba and the U.S.’ Amazon attempted to penetrate the market, Coupang would not give an inch. It would push back with its local reputation and infrastructure so that the rivals would be unable to invest much to compete in such a small country, he said.
 

“I think they will not deploy huge resources in Korea. Amazon or Alibaba, maybe they can spend $100 to $200 million, but they will not put more than billion-dollar sizes in Korea. From their perspective, focusing on a bigger market would make sense,” Kim said, adding that Amazon may pass over Korea to eye Japan or China.

“The size of the market is meaningful, but they need to compete with big local players. In terms of return on investment, it doesn’t make sense from the foreign player’s perspective.”

The key to Coupang’s success over rivals WeMakePrice and Ticket Monster, Kim noted, was its focus on customer service. The company, founded in 2010, has yet to record a profit, but SoftBank is betting on Coupang’s vertical expansion strategy to pioneer its same-day delivery service nationwide.

Kim and SoftBank believe that Coupang, which is Korea’s top mobile e-commerce vendor, will not only revolutionize e-commerce through its upcoming intricate delivery system, but also overtake rival e-retailer Gmarket’s dominance in Web sales, especially as mobile payment systems get easier.

He said SoftBank predicts online sales will catch up with off-line sales in 10 years as more brick-and-mortar retailers open up shops online, and there would be no distinction between the two.

“I think after three to five years, we won’t have to segregate online and off-line markets. They’re all online mobile players going forward,” he said. “No. 1 in mobile means No. 1 in the market. That’s our philosophy about e-commerce.”

While the Japan headquarters plans to expand its dominance in Asia while digging into the U.S. market through its acquisition of telecom company Sprint, Kim said the Korea office will continue its focus on ICT for the next three years, focusing on mobile services, mobile tech, mobile personalization and eventually robotics.

“Other than Coupang, we’ll keep investing in major players in Asian countries,” he said. “I think we will keep developing potentially No. 1 players in each country in e-commerce.”

For more information, visit www.softbank.co.kr.

By Elaine Ramirez (elaine@heraldcorp.com)



Start-up Seoul is a series featuring players in Korea’s emerging tech start-up scene. This is the sixth installment. ― Ed.