Bom Kim, founder and chief executive of Coupang.
Update: Bom Kim’s net worth was down to $8.6 billion by the end of day Thursday, as Coupang’s stock closed at $49.25.
Korean e-commerce giant Coupang’s shares surged on its New York Stock Exchange listing Thursday, reaping a huge bonanza for the company’s founder and chief executive, Bom Kim. The stock opened at $63.50, far exceeding its IPO price of $35 per share and valuing Coupang at a staggering $109 billion. The IPO price was raised from a marketed range of $32 to $34 per share, above the initial range of $27 to $30.
Kim’s 10.2% stake is now worth $11.1 billion, more than a tenfold jump from his pre-IPO net worth of $1 billion. The windfall easily makes Kim, 42, the third-richest person in South Korea, ahead of Jay Y. Lee, vice chair of Samsung Electronics and Mong-koo Chung, head honcho of the Hyundai empire.
With the initial $4.6 billion raised in the IPO, Coupang carried out the biggest listing in the U.S. so far this year and is the largest Asian company to list after Alibaba in 2014. The Seoul-based company is now the most valuable startup in its home country, double the market cap of search engine Naver, which is valued at $54 billion.
Coupang, which currently only operates in the Korean market, has succeeded in a country where virtually all of its 52 million citizens own a smartphone with a high-speed internet connection. Founded in 2010 by Harvard-educated Kim with a business model akin to Chicago-based Groupon, Coupang has since pivoted its business model to become South Korea’s Amazon or Alibaba (although the latter is essentially a marketplace that connects buyers and sellers).
Early investors, such as BlackRock and Sequoia Capital, poured $300 million into Coupang in 2015, followed by a $1 billion funding round later that year from the likes of Softbank Capital and others, allowing Coupang to boost its inventory and focus on swift deliveries.
In 2018, Coupang raised $2 billion from Softbank’s Vision Fund and expanded across the country. The 11-year old startup has become a gem in Softbank’s portfolio of companies; the Vision Fund’s 33.1% stake is now worth nearly $37 billion, worth more than its holdings in Uber or DoorDash, according to Pitchbook. Other investors scoring billions in the IPO include Rose Park Advisors and Greenoaks Capital, among others.
The proceeds from the offering will give Coupang a war-chest for potential acquisitions or investments in complementary businesses, according to its prospectus. The company now has more than 100 fulfillment centers in 30 cities and a crew of 15,000 full-time drivers. That allows Coupang to guarantee next-day delivery for orders placed before midnight. According to the company, 70% of Korea’s population lives within 7 miles of a Coupang logistics center.
“They took the global learnings [from Amazon and Alibaba] and the results are astounding, ” says Eric Kim, a managing partner of venture capital firm Goodwater Capital, who served on Coupang’s board until 2016.
A Coupang fulfillment center.
Coupang now commands nearly 25% of Korea’s $115 billion e-commerce market, outpacing incumbents such as Gmarket (owned by Ebay) and websites of conglomerate-run retailers Lotte and Shinsegae. One of its key distinctions: an in-house delivery fleet in a market where shipments are outsourced to third party firms. “There’s still a lot of room for growth in South Korea,” says Kim.
According to Goodwater, Coupang has already surpassed mega retailers such as Walmart, Etsy and Alibaba in dollar retention rates (the change in consumers’ spending since their first purchase). And it’s beating Amazon at its own game: Coupang’s 2017 cohort of consumers spent 350% more by their fourth year (2020) to Amazon’s 280%. The findings were sourced from Coupang’s S-1 filing and proprietary research by Goodwater. A spokesperson for Amazon says the figures aren’t reported by the company and didn’t comment further.
But maintaining its prime market position comes with challenges. Coupang faced scrutiny last March when a temporary contract worker died during a delivery shift in Ansan, a city south of Seoul; in October, a 27-year-old male who worked at the company’s fulfillment center in Daegu died shortly after a night shift. The company denied the deaths were due to overwork, citing less hours than the country’s legal limit for full-time employees. An investigation by the Korea Workers’ Compensation & Welfare Service ruled the October death as work-related; Coupang issued an apology, acknowledging the verdict and stating that it will actively support the bereaved family. A delivery driver for Coupang died this past Sunday, though he wasn’t on the job at the time of his death.
The Korean Public Service and Transport Workers’ Union attributed the deaths to grueling hours and demands brought on by the company’s fast-paced delivery system. Earlier this week, the Financial Times reported that eight people employed by Coupang have died over the past year due to unfavorable working conditions, citing less automation than other e-commerce giants. A spokesperson for Coupang did not respond to a request for comment.
