Coupang: South Korean E-Commerce Selection & Pricing
Former Vice President at Coupang
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Former Vice President at Coupang
Interview Transcript
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I have a couple of questions. I'm curious about the speed at which those warehouses are built and become operational. Is there anything else like that in the world of ecommerce? For example, is Flipkart in India doing something similar? What about Walmart, Amazon, MercadoLibre, or Shopee? I'm curious about how you benchmark against others and whether there are others who can do this as quickly.
In Korea, we realized that due to the vertical nature of warehouses, the cost of building is much higher than in the US, India, or China. I don't know much about Mercado in Latin America, but since they are more of a marketplace than retail, their warehouse requirements are lower compared to Coupang. In terms of speed, unless you go vertical, it's challenging to complete a large warehouse in two quarters. If Amazon or Flipkart were to do it today, they would likely need at least one more quarter than Coupang. Coupang didn't achieve this two-quarter timeline in just six months; it took them about three years to get there. Initially, it took 15 months on average to complete a facility. They learned by scaling, using a cookie-cutter approach, standardizing, and going vertical. In most countries, unless it's a dense area like Taiwan, Japan, or Korea, you don't need to go vertical.
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It's a very tough business. I'd love your perspective on Coupang's position, some innovations that enabled it, and why it works in Korea. Anything you can share would be appreciated.
I still remember during the four years we were there, our selection increased by 10 times. When I say selection, I don't just mean having one piece of an item, but enough variety to meet demand. We also worked on optimizing inventory loss because these products have a low shelf life. Initially, our inventory losses were around 7.6% to 7.7%, but last year, it was down to 3.8%. We undertook multiple projects to achieve this.
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