“Coupang? Who on earth is Coupang?” I can hear you ask. Well, if you combined Amazon’s e-commerce capability, Instacart’s shopping capability, and the food service deliveries of Doordash into one very Korean platform then you might have something that looked a little bit like Coupang.
If you are looking to do business with consumer products in South Korea then you certainly need to know how to work with Coupang, and you need to also consider whether to do that from a position within the country or from outside. If you don’t already have a partner in Korea then Coupang Global Marketplace could be a great option for entering the Korean food & beverage market.
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How did this all start?
Coupang is a South Korean e-commerce company who are based in Seoul, South Korea but incorporated in the USA. The company was founded in 2010 by Bom Kim and has since become the largest online marketplace in South Korea.
In 2020 the platform had revenue of $12 billion and an operating income of $527 million. Totally they have 37,000 employees as of the end of 2020.
Following an IPO in March 2021, Coupang announced that they have also started operations in Japan and Taiwan, although these are really small in comparison to their core Korean business.
What sets Coupang apart from other platforms?
Coupang is especially known for their excellent logistics services and their obsession with the customer experience.
The founder wanted to address the problems of
- Long delivery times
- Expensive shipping (with cut-off times and limited products)
- Huge amounts of packaging waste and unlimited returns
The solution became an end-to-end integrated system using cutting edge technology to wow both Customers and vendors. The data driven approach meant that the customer and vendor experience could be controlled and improved at all stages of the process through hugely increased tracking efficiency. Basically, consumers are offered a white glove purchasing experience at an affordable price.
I’d also add that these points of focus mean that you as a vendor need to also make sure you can ship fast and reliably and provide excellent levels of customer service.
The signature delivery service of Coupang is called Rocket Delivery. This service is free for Rocket membership subscribers, and offered to non-subscribers if they purchase more than around 20,000 Korean Won (KRW) – that’s about €14. According to Wikipedia 32% of Coupang’s users are subscribed and 99.3% of Rocket delivery orders are delivered within one day, mostly as overnight deliveries if orders are placed before midnight.
This is a paid subscription service, something similar to Amazon Prime and costs around €2 per month. This includes free deliveries and returns, discounts on certain products, one day delivery as standard and also the possibility to receive Rocket Fresh products (food and drinks) by 7 am in the morning for any orders that you placed before midnight.
Obsession with customer experience
Those customers who have membership to the Rocket programme have a considerable increase in spending. This has proven that the focus on loyal customers is the right policy. Korean customers love the convenience of the experience as well as the fast delivery, often on the same day including during weekends and holidays. When you add onto this Coupang pay and the fact that 75% of the packaging used is reusable then you start to see why the customers enjoy shopping here.
So, when we talk about the food offerings then we need to look at the selection.
Coupang has a really wide selection especially of fresh food and international foods from across the globe. Furthermore, there’s also the service Coupang Eats which allows you to order deliveries from your favourite restaurants. During the pandemic the platform also began with livestream videos talking about cooking as well as infotainment topics, as well as selling products.
Cross-border e-commerce (CBEC)
In 2020 total cross-border sales into Korea totalled a value of 4 trillion KRW. That is around €2.9 billion. In the first quarter of 2021 cross-border sales grew by 44% versus the year before.
Traditionally, imported food and health products sold via cross-border e-commerce have been dominated by imports from the US market.
Popular categories as I’ve discussed before in my posts include health supplements, drinks and snacks. Indeed cross-border e-commerce makes up 23.4% of total cross-border e-commerce.
Coupang Global Marketplace
In order to serve the growing demand for high-quality imported overseas goods Coupang developed their Global Marketplace. This offers a variety of advantages for both consumers and sellers
Whilst selling cross-border can be extremely successful for overseas brands & a great way to test the market, it isn’t allowed for a range of products.
In the “food and beverage” space those forbidden items include
- Refrigerated or frozen products
Applying to be a Global Marketplace Vendor
- You need to fill out the application here. However, there is no need for you to have a company in Korea or a Korean bank account
- List the products which you are looking to sell on Coupang and work out the budgets that you have available to support their sales development
- Prepare for sales
During the application process you need to provide the following documents and information:
- A copy of your business license
- proof of your ID
- letter from your bank or a copy of a bank statement proving that you have an account and that it’s also in the same name as your business license
- the proof of who owns your business
- a proof of who is the contact person and the contact number of that person
How can you promote your products if you sell on the Global Marketplace?
As with other e-commerce market places you are able to place product ads on a Pay per click basis.
In addition to this, livestreaming is also an extremely important part of marketing within South Korea these days. As is the case in China livestreaming is an effective way of driving traffic to both your brand and also in addition content.
For global vendors on the Coupang Global Marketplace there are also specific promotions which are organised such as Global Day or the Gold box.
What about the fees & payments?
Selling on the Global Marketplace is actually really cheap if you compare this to other market places within Asia such as Alibaba’s T-mall, jd.com or Shopee. The actual commission due varies depending on the category, but this ranges from 4 -11%. There are no other fees due.
Vendors receive their money paid out from deliveries on a monthly basis. You can choose to receive your payments in most major currencies such as GBP, EUR or USD.
Big data analysis
The advantage of selling via e-commerce is always that you can analyse your data in the dashboard, which is easily accessible. Coupang is no exception to this.
If you’re selling via e-commerce, the pricing can be a tricky topic. You risk causing yourself problems for the future if you are not yet selling off-line in South Korea, if your prices are not set at a suitable level to allow for an importer in the future. Additionally, e-commerce platforms need to have the ability to run dynamic promotions which means that Coupang allows their sellers to set certain price thresholds and corridors within which promotions can be organised.
As the products are sold cross-border they are not subject to VAT.
Logistics, customs and import requirements
Unless the product you are selling belongs to a category which requires a so-called KC Mark (this is the Korean Certification standard) then your products will not need a Korean label to be sold on Coupang. However, products such as children’s products need to have this KC mark and therefore also need a label in Korean with ingredients & feeding instructions.
Three methods of customs clearance for courier packages
- List clearance for packages with a value of under $200. This kind of clearance is allowed only for certain kinds of products. It includes items for personal use which are then deemed to be duty-free and will be custom cleared based on a bill of lading. In order to do this the consignee needs to submit their personal unique customer’s club code and this is limited to one shipment per person per day.
- The next level of customs clearance is so-called simple customs clearance for packages which have a value between $200 – $2,000. These are cleared according to the so-called general customs list.
- For anything over the value of $2000 you need to make a general regular imports decoration which is a more complicated process.
Realistically speaking, the team at Coupang will help vendors with this to ensure everything runs smoothly.
Deliveries from the USA which are under 30 kg generally take between three and four days to be delivered to customers in Korea.
Is Coupang the right solution for your company to enter the South Korean market?
If you are looking to test the market in South Korea, then an entry via the Coupang Global Marketplace could be the right answer for you. It allows you to conveniently deliver directly to consumers from your home market base.
This platform allows you an ideal opportunity to test the reaction of consumers to your products whilst being able to offer them ready-made solutions in terms of end-to-end logistics and a trusted e-commerce platform.
The process is relatively speaking simple and Coupang take over all of the complicated parts such as the customs clearance and telling you which documentation is needed or which changes you need to make. They can also help you with the preparation of marketing materials.
In future they are also planning to have regional warehouses in Europe in the same way that they have staging warehouses in the US at the moment. This will make the process considerably more seamless. In the words of the platform, they are building the future of commerce or to put it another way, “How did we ever live without Coupang?“
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If you are interested in doing business in South Korea, you might also find these posts helpful:
- A guideline to entering the food and beverage market in South Korea
- Entering the Food and Beverage Market in Korea: finding the right importer
- Entering the Food and Beverage Market in Korea: Understanding Consumers
- Why Optimising Naver Blog posts Pays Off
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