FACT LIST FROM FCG. COUPANG
How the largest South Korean marketplace works with the fashion category
Coupang is the largest e-commerce platform in South Korea. Since 2023, Coupang Inc. owns the Farfetch platform
Country: South Korea.
Year of foundation: 2010.
Revenue: $24.3 billion (2023) for comparison, Ozon revenue 2023 is 424 billion rubles, Wildberries revenue 2023 is 538.7 billion rubles.
The history of the creation of the «coupon» marketplace
This is a very young project compared to other market leaders. It is 14 years old (Amazon (USA) — 30 years old, OZON (RF) — 26 years old). Kim Bum founded Coupang in May 2010 as a South Korean equivalent of the American coupon sales service Groupon. But by forging its way into the market through coupons, Coupang soon evolved into a traditional e-commerce platform. Kim wanted to build the business as an online ecosystem based on logistics – “the South Korean Aliexpress”.
Indeed, the company’s popularity skyrocketed after the launch of Rocket Delivery in 2014, a subsidiary offering Coupang customers the fastest possible same-day and next-day delivery of purchases. This immediately attracted the attention of shoppers.
What is Coupang today?
Coupang is often called the “Korean Amazon” due to its size and position in the local market. This mass-market generalist marketplace sells everything from fashion and beauty products to toys and home appliances, and provides a range of additional services, including online store Rocket Fresh, food delivery platform Coupang Eats, video streaming service Coupang Play, and digital payment platform Coupang Pay.
Coupang is considered a Korean platform, with most of Coupang’s business being conducted in Korea. However:
- registered in the state of Delaware in the United States,
- company’s headquarters were in Seoul until 2022, but are now based in Seattle after listing on the New York Stock Exchange in 2022,
- company has expansions in Taiwan, Singapore, mainland China, and India.
Not all of the company’s attempts to expand internationally have been successful. For example, last year it ceased operations in Japan, less than two years after its launch.
The Fashion Category – a Special Focus Area and a Bridge to the Premium Segment.
Since 2021, Coupang has been actively developing the fashion category. To strengthen its fashion department:
- Coupang began with an extensive recruitment of several dozen employees, from merchandising directors and marketers to customer service specialists;
- began strengthening the brand pool, turning to both established favorites that are popular in other countries and promising new brands;
- began stimulating the creation of attractive content by suppliers in a very unusual but practical way. In 2022, for fashion brands that joined the marketplace, the company provided photo and video studios in popular spots in Seoul for free;
- supplier education: the company began systematic free lectures for sellers;
- began moving through the “showcase” premium segment, focusing on cosmetics accessible to a wide range of buyers. In 2023, Rocket Luxury launched, allowing customers to buy beauty products from brands like Estée Lauder, Mac, and Bobby Brown via its Rocket Delivery service;
- Acquired multi-brand online retailer Farfetch as a way to enter the premium fashion market.
Coupang x Farfetch
Farfetch for Coupang
It is likely that Coupang was inspired by other multi-category mass e-commerce players in Asia that have entered the premium segment and begun to compete directly with Korea’s SSG.com.
China: Tmall and JD.com, both part of the Alibaba Group, have their own dedicated luxury sub-platforms.
Japan: Rakuten and Zozo have recently followed suit by entering the premium fashion market.
Mass e-commerce platforms like Coupang have found it difficult to establish commercial relationships with luxury brands. Coupang gained access to them through Farfetch — Farfetch’s most important asset is its established relationships with luxury brands.
Coupang inherited Farfetch’s market positions in the US and Europe, gaining direct access to customers outside of its existing Asian markets. Coupang’s current audience is mainly Korean, Asian, while Farfetch’s audience is truly global.
Coupang for Farfetch
The Asian luxury distribution zone. Asia is a powerful alternative luxury consumption center. At the same time, Coupang is also attractive to Farfetch because it is a large, growing, and multi-market player centered in Asia, which is important for the luxury sector, where Farfetch is active. Coupang has strong logistics capabilities, while Farfetch is weak in comparison. Thus, operational synergies can be created that will help Farfetch’s operations.
Coupang has helped Farfetch avoid bankruptcy. The deal saw Farfetch receive $500 million in emergency financing. It also allowed the company to avoid bankruptcy, which had recently been threatening it due to the slowdown in the luxury market and its high debt load.
The Coupang-Farfetch deal comes at a time of growing skepticism about the future of the wider multi-brand luxury e-commerce sector, with established players like Matches closing and the fate of Yoox, Net-a-Porter still up in the air. Coupang’s biggest challenge now will be to buck this trend.