In order to get Lucky Charms sent to his doorstep in South Korea, HL Rogers relies on a team of engineers in Seattle.
In South Lake Union, a group of tech workers from Coupang — an e-commerce company known for its same-day delivery service in South Korea — are working to bring products from the U.S. into Coupang’s South Korea fulfillment network by partnering with large brands like General Mills as well as smaller businesses.
That’s how Rogers, Coupang’s general counsel and chief administrative officer, orders Ghirardelli brownie mix for his children and gluten-free pasta for his wife. “There’s not an idea of gluten-free in Korea,” he joked.
Coupang opened an office in Seattle in 2018 to tap into the tech talent in the region and the retail, logistics and e-commerce knowledge that comes with having Amazon and Costco in the same backyard. Now, it has about 350 employees and is looking to grow, Rogers said this month when he was in town for a conference focused on helping small businesses scale up.
Worldwide, Coupang has about 60,000 employees and 11 offices and serves customers in South Korea, Taiwan and Japan. It doesn’t have any plans to expand its delivery service to the United States, Rogers said.
In Seattle, some of Coupang’s engineers are focused on its advertising business while others are building the tech to help third-party sellers use Coupang’s digital platform and fulfillment centers to sell their own products. Another is working on Rocket Jikgu, the service that helps U.S.-based brands sell their products in South Korea on Coupang’s fulfillment network. Those products move through a warehouse in Riverside, California.
The employees in Seattle are “the ones that are solving the logistics problems. They’re the ones who are finding the sellers. They go out and identify not just partnerships with the big brands but they’re going out and looking at the small and mid-size companies that can’t get into Korea otherwise,” Rogers said.
“The companies that have traditionally been here — with Microsoft and Amazon and so many others — there’s a lot of expertise and tech skill here,” he said. “Korea has a lot of technical experience, technical professionals, but when you need machine learning and ranking engineering, those types of things, you really have to come to the U.S. West Coast.”
Delivering the ‘wow’ experience
Founded in 2010, Coupang started out to address the “conventional trade-offs” for customers in the e-commerce world: Long and inconsistent shipping times, high fees for fast delivery, the hassle of cardboard disposal and cumbersome returns if a product doesn’t work out.
SoftBank, Sequoia Capital and BlackRock invested in the startup. As it sped up delivery and increased product offerings, it earned a reputation as the “Amazon of South Korea.” In 2021, Coupang went public on the New York Stock Exchange, raising $4.6 billion and bringing the company’s valuation to $85 billion.
“The guiding principle for our decisions has never wavered. We start from our customers’ biggest needs and find ways to deliver the ‘wow’ experience,” founder and CEO Bom Suk Kim wrote in a letter to investors ahead of its initial public offering.
“We are proud of what we’ve built. But this is just the beginning,” he wrote.
In a business model similar to Amazon, Coupang built a network that includes 25 million square feet of infrastructure, more than 15,000 delivery drivers and a whole lot of algorithms to keep products moving through its warehouses and trucks to a customer’s doorstep, according to filings with the Securities and Exchange Commission from 2021.
Overall, its physical footprint spans the length of over 400 football fields. Coupang estimates 70% of the population in South Korea lives within 7 miles of one of its logistics centers, enabling same-day delivery and, in some cases, drop-offs just hours after a customer places an order.
It uses machine learning to stock its warehouses, anticipate demand and keep popular items in stock. It “re-engineered” the fulfillment process to eliminate cardboard boxes in 85% of packages, and customers can make returns simply by leaving an item on their doorstep, eliminating yet another package, a return label and a trip to the post office.
Coupang also offers Rocket Fresh, its grocery delivery service; Coupang Eats, a meal-delivery service; and Coupang Play, a video streaming app.
The company reported a $75 million loss in the second quarter of 2022, the most recent financial data available. That’s up from a $134 million loss in the first quarter.
The ‘Amazon of South Korea’
Rogers said Coupang both likes and dislikes the comparison to Amazon. On one hand, Amazon is a household name and he credited the company with creating the e-commerce market. On the other, he says Coupang is faster.
Orders can get to a customer’s doorstep within six hours, Roger says. Coupang promises customers can place an order before midnight and have it delivered before 7 a.m. the next morning.
“What really sets us apart from Amazon is an issue of expediency,” he said.
Rather than relying on something like FedEx and UPS to deliver its packages, Coupang has an end-to-end network, meaning it has control over every part of a package’s journey.
It built its own “last-mile” delivery service to cover the final leg to a customer’s doorstep that is often handled by mail carriers in the U.S. That makes it easier for customers, Rogers said, because “the same truck bringing me my shoes is also bringing me my lettuce, carrots and milk.”
That network never stops moving, the company says. Some of its 15,000 delivery drivers are assigned to just one building — dropping off new orders and groceries and then picking up returns and reusable bags for the next grocery haul.
“Our Coupang trucks are ubiquitous, they’re everywhere,” Rogers said. “That’s why we can get the order there at 6 a.m. That’s why we can pick up the reusable Fresh bags, why we can pick up returns, because our delivery people are always running these circuits, they’re always in your apartment building, they’re always in your neighborhood.”
Despite Rogers’ objections, Coupang has long been compared to Amazon. Both companies strive to deliver a wider range of products in an ever-shorter amount of time. Both rely on a network of warehouses and high-tech systems to keep their fulfillment networks running smoothly. Both have lofty ambitions — Amazon hopes to be an “everything store” and “Earth’s best employer” while Coupang wants customers to wonder “How did we ever live without Coupang?”
Meanwhile, both companies have also been accused of poor working conditions in warehouses and regulatory agencies are investigating both companies for anticompetitive business practices (with similar allegations made against both e-commerce platforms.)
In August, a New York law firm filed a securities class-action lawsuit against Coupang, alleging the company’s “lower prices, historical revenues, competitive advantages and market share were the result of systemic, improper, unethical and/or illegal practices and, thus, unsustainable.”
The Korea Fair Trade Commission is investigating Coupang over allegations that it manipulated product reviews to promote its own brand of products over other sellers. The FTC is also looking into allegations that Coupang set higher prices for members of its Rocket Wow service, a subscription service that the company says offers users discounts for a monthly fee.
The company disputes those allegations. Rogers said he could not comment on the ongoing investigations but added that Coupang believes “very strongly in following the law.”
At the same time, the company is under scrutiny for working conditions at its warehouses. Advocates say workers are under extreme pressure to fill orders, without adequate time for breaks, and that the company tracks worker productivity closely.
Rogers said the company has had only one work-related employee death and has not had any accident-related deaths. It does not set productivity requirements for its workers and has rejiggered its algorithms to reduce the distance workers have to walk to fill orders, he said.
Coupang has “the best working conditions in Korea,” Rogers said, pointing to its pay and insurance benefits.
Though there aren’t formal union elections like in the United States, Rogers said workers in Korea can declare they have formed a union — with or without a majority vote.
Every Coupang facility has a contingent of workers who are in a union, he said, but “to me, what’s really eye-opening about that is our employees that have an opportunity to join any union they want, don’t because our working conditions are the best in the market.”
This story has been updated to add that Coupang disputes allegations that it offers higher prices to members of its RocketWow subscription service.