SoftBank invests $2b in Korean e-commerce unicorn

SoftBank Vision Fund has injected another $2 billion into Coupang. Little outside competition means that it continues to pave the way in the Korean e-commerce market.

SoftBank Vision Fund has invested $2 billion in Coupang, one of South Korea's largest e-commerce platforms, to help it speed up its growth.

Proceeds will allow Coupang to invest more technology into consumer services, and are the follow-on of SoftBank’s Group’s $1 billion investment in June 2015. SoftBank has put more money into the company to prepare it for an IPO. Coupang, it believes, is taking the market.

SoftBank, Sequoia Capital, and three other investors injected $100 million in Coupang in 2014, followed by a $300 million round in the same year in December from BlackRock, Wellington Management and four other investors. 

Founded in 2010, Coupang is Korea's largest online retailer. Its revenues have more than doubled in the last two years and approached $5 billion this year.

Half of all Koreans have downloaded Coupang’s mobile app, and the platform sells 120 million items online. Coupang has said its own payment service, RocketPay, has grown 200% this year alone.

The Korean e-commerce company has tried to differentiate itself with faster shipping via its own logistics system. Coupang has been developing its logistics services for a within-24-hours home delivery and a within-hours-delivery for fresh food. At the moment the company offers guaranteed one-day delivery for 4 million retail items through its Rocket delivery service.

Coupang is already valued at more than $5 billion and could go for an IPO next year or the year after.

South Korea’s retail e-commerce volume is likely to grow from $19.12 billion in 2016 to $32.56 billion by 2021, thanks to strong mobile adoption. According to research site Statista, online shopping in Korea is still growing at a double-digit rate.

For overseas internet giants, an increase in taxes is the first issue they may face when they enter the Korean market. A group of 15 Korean lawmakers proposed a bill earlier this month to amend value-added tax on digital products such as advertisements, cloud computing services and forms of online-to-offline services. This could mean a tax increase for companies like Amazon, Google and Alibaba.

Governmental protection has kept fierce overseas competitors at bay and has made it less stressful for homegrown companies to develop e-commerce in South Korea. And Coupang's private fundraising this time is by far the biggest among all South Korean companies. 

“Coupang is well-positioned to lead the Korean e-commerce market given its data, payments and logistics advantage,” according to Lydia Jett, the partner at SoftBank Investment Advisers and Coupang board members.


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