Will directly take on Flipkart and Amazon it it sets foot in India
New Delhi, NFAPost: South Korea’s ecommerce giant Coupang is planning to enter the Indian market. The SoftBank-backed start-up has started dialogues with the Indian government to enter one of the world’s largest e-commerce markets, government officials told Business Standard.
“We have received an application from the South Korean government, in which Coupang has expressed interest in entering India,” officials said, adding “Dialogues with the Coupang delegation are likely to start next month.
The query sent to Coupang remained unanswered till the time of going to press. If the Seoul-headquartered firm, also known as “Amazon of South Korea”, enters India, it will directly compete with homegrown Flipkart and Seattle-based Amazon.
Though the two giants have proved their success in the Indian market over the past decade, but are facing challenges from the government-backed ONDC and other homegrown e-commerce platforms such as Reliance’s JioMart and Tata Digital.
India is fast emerging as a lucrative e-commerce market, but is still seen as under-penetrated. It is projected to grow from $83 billion in 2022 to $150 billion in 2026, according to the FIS 2023 Global Payments Report.
Flipkart ($23 billion gross merchandise value or GMV) and Amazon ($18-20 billion GMV) lead on the scale, with the two having cornered about 60% market share. Reliance is third at $5.7 billion ecommerce sales, driven by attractive fashion (Ajio) and JioMart (e-grocery), research firm Berstein said in a report this month.
Coupang’s proposal comes a year after the company announced that it was closing operations in Japan. The firm decided to withdraw from Japan, 21 months after it began offering its online delivery service there, according to The Korean Times report in March 2022.
The decision was said to have been taken as Japan has a strong convenience store business culture and the country has, by far, the highest senior population in the world, and many of whom are not used to shopping for groceries online.
But in India the company hopes that rising internet penetration and a young population increasingly dependent on online deliveries will help it grow.
Around 346 million Indians are engaged in online transactions, including e-commerce and digital payments, according to the ‘Internet in India’ report published in 2022 by the Internet and Mobile Association of India (IAMAI). The report estimates active internet users in India at 692 million. This number is projected to touch 900 million by 2025.
The company has a signature service called Rocket Deliver, under which items ordered before midnight are delivered the following day. Under the Rocket Direct Purchasing service, all imported goods bought on Coupang will be delivered within three days. The Coupang Rocket Wow Logo service is similar to Amazon Prime. Customers get free delivery and other benefits after paying a subscription fee.
The company also delivers fresh food overnight on Rocket Fresh and has a food delivery service called Coupang Eats. It provided gig work to people over 18 years through its Coupang Flex. For entertainment, the firm has launched a subscription-based video streaming service, Coupang Play.
Coupang’s annual revenue in calendar year 2022 was $20.6 billion, up 12 per cent YoY.
The company says it provides same-day or next-day delivery of more than five million unique items and 99.6 per cent of its orders are delivered within 24 hours. Moreover, 70 per cent of Korean citizens live within 10 minutes of a Coupang logistics centre.
Coupang raised $4.6 billion in the biggest IPO in the US in 2021. The offering was the largest on a US exchange since Uber raised $8.1 billion in 2019. Softbank became Coupang’s largest investor after the IPO, owning a third of the company.
Greenoaks Capital has a 16.6 per cent stake, Maverick Holdings has 6.4 per cent, and Rose Park Advisors, 5.1 per cent. BlackRock holds a 2.1 per cent stake and CEO Bom Suk Kim owns about 10.2 per cent.
