Weekly Business Insights from Top Ten Business Magazines | Week 299 | Strategy & Business Model Section | 3

Extractive summaries and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Week 299 | June 2-8, 2023.

How the ‘Amazon of Asia,’ founded by a Harvard Business School dropout, landed on the Fortune 500 for the first time

By Nicholas Gordon | Fortune Magazine | June 5, 2023

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The 2023 Fortune 500 list, ranking U.S.-based companies by revenue, features a surprising newcomer at No. 195: Coupang, an e-commerce giant that conducts most of its business in South Korea.   CEO Bom Kim founded Coupang, incorporating it in Delaware in 2010, after dropping out of Harvard Business School. Returning to Seoul, Kim set up the business as a Groupon-style service, before quickly pivoting to digital retail. The company grew to become one of South Korea’s key e-commerce companies, competing with giants like South Korea–based Naver. The firm attracted backers such as Stanley Druckenmiller and Bill Ackman, as well as SoftBank’s Vision Fund. Before Coupang’s IPO in 2021, SoftBank owned over a third of the company.

The firm’s boosters sold Coupang as the next “Amazon of Asia.” The startup lured users with its extreme convenience; customers can order goods as late as midnight and still have them delivered before seven the next morning. Users can also return goods easily, leaving packages on their doorstep for delivery drivers to retrieve.

The IPO was a bonanza. Coupang raised $4.6 billion, and shares opened 81% above their offer price, at one point valuing the company at more than $100 billion on its first day of trading.  The rally was short-lived.   Shares have recovered from those lows, albeit slowly; they have risen almost 60% from the lowest point last year, hitting over $15 as of June 1. Still, the company’s current market cap of $27.8 billion is roughly a quarter of the valuation it hit on its first trading day.

According to the company’s annual report, 97% of Coupang’s 2022 revenue of $20.6 billion came from its “product commerce” division, which includes retail and grocery delivery services. The e-commerce firm earns sales from its own stock of goods, and pockets a fee from third-party sellers, similar to Amazon. Coupang’s newer initiatives, like meal delivery service Coupang Eats and streaming service Coupang Play, generated the remainder of its 2022 revenue.

3 key takeaways from the article

1. The 2023 Fortune 500 list, ranking U.S.-based companies by revenue, features a surprising newcomer at No. 195: Coupang, an e-commerce giant that conducts most of its business in South Korea.
2. CEO Bom Kim founded Coupang, incorporating it in Delaware in 2010, after dropping out of Harvard Business School. Returning to Seoul, Kim set up the business as a Groupon-style service, before quickly pivoting to digital retail. The company grew to become one of South Korea’s key e-commerce companies, competing with giants like South Korea–based Naver. 
3. The firm’s boosters sold Coupang as the next “Amazon of Asia.”  97% of Coupang’s 2022 revenue of $20.6 billion came from its “product commerce” division, which includes retail and grocery delivery services. Coupang’s newer initiatives, like meal delivery service Coupang Eats and streaming service Coupang Play, generated the remainder of its 2022 revenue.

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Topics:  Strategy, Business Model, IPO