Coupang is Amazon.com in South Korea, but maybe even better.

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The more I find out

Coupang,

the more I want to move to Seoul.

South Korea’s largest e-commerce company, Coupang (scorer: CPNG), went public last week in a spectacular way. It now ranks as the second largest public company in the country, just behind

Samsung Electronics.

It was the largest initial public offering in the United States by a foreign issuer since then

Alibaba Group Holding

in 2014 and the largest new number in the US of any kind since

Uber Technologies

in 2019.

Founded in 2010 by the Bom Kim dropout from Harvard Business School, Coupang has become a huge force in the South Korean economy. The company accounts for 4% of the country’s trade with consumers, with a wide range of online retail services: Think

Amazon.com

addition Instacart,

ByDash,

and

Netflix.

Coupang has about 50,000 employees and expects to hire another 50,000 Koreans by 2025.

Coupang may be like Amazon, but it has important geographic advantages. South Korea is a super-dense, highly populated country with over 50 million people. Eric Kim, who served on Coupang’s board of directors from 2011 to 2017, while CEO of Maverick Capital, an investor in the company, notes that South Korea has about the same mass of land as Indiana – but nearly 10 times the population . Take out the uninhabitable mountain regions, he adds, and all those people are trapped in a Rhode Island-sized area.

This high density makes Coupang respond. The company has 25 million square meters of storage space, distributed in 100 locations in over 30 cities. Coupang says 70% of Koreans live less than seven miles from one of its distribution centers. Almost anything can be ordered on the same day, and “delivery at dawn” ensures that goods ordered before midnight are delivered by 7 am

Coupang also eliminated the need for cardboard boxes and bubble wrap for 75% of deliveries. (Let’s see how you do it, Amazon.) Coupang Fresh, the company’s leading online shopping service, delivers goods in reusable containers – leave them by the door and are removed by one of Coupang’s 15,000 delivery staff to be reused. Return of goods? Leave them outside the door – no special packaging or printed labels are required.

Coupang had revenues of $ 12 billion in 2020, up 91% from the previous year, as the pandemic helped accelerate growth from 55% in 2019 and 69% in 2018. Growth was over 90% in each from the last four quarters.

Although not yet profitable, the company is approaching. Coupang’s profit margin, measured by adjusted earnings before interest, taxes, depreciation and amortization, was minus 2.1% last year, compared to minus 8.8% the previous year. And that reflects some unusual costs to protect workers from the pandemic.

In the IPO, Coupang sold 130 million shares for $ 35 a piece. The stock opened trading at $ 63.50, giving the company a market capitalization of $ 114 billion. The stock then fell, closing at just under $ 50 a share on Thursday, for a valuation of just $ 90 billion.

Coupang shares are not cheap—

eBay

(EBAY) has comparable revenues and less than half of the market capitalization. And the stock trades at a slight premium to Alibaba (BABA), based on 12-month sales. But Coupang has some distinct advantages. Alibaba faces stiff competition from companies such as Pinduoduo and

JD.com.

Alibaba’s growth rate is less than half that of Coupang. And Coupang doesn’t have the Chinese Communist Party to look over his shoulder.

One thing Alibaba and Coupang have in common is a close relationship

SoftBank Group

(SFTBY) – the Japanese holding company is the largest investor in both companies.

SoftBank invested $ 700 million in Coupang in 2015. In 2018, the SoftBank Vision Fund, the company’s $ 100 billion risk portfolio established in 2016, invested another $ 2 billion in a business led by Lydia Jett , a Vision Fund executive who is now on Coupang’s board of directors. The initial investment was incorporated into the Vision Fund, for a total bet of $ 2.7 billion. That stake is now worth $ 30 billion. It’s a monster gain – and probably the biggest exit ever for a deal led by a woman risk investor.

SoftBank did not sell any shares in the offer, and Jett says in an interview Barron’s that the company intends to be a long-term investor, as it was with Alibaba. More than 20 years after the initial investment, SoftBank’s remains the largest owner of Alibaba.

“We are ready to own a long-term Coupang,” says Jett. “There is a lot of space left in a $ 500 billion retail market.”

It seems strange that South Korea, one of the most advanced countries in the world, has played such a small role in the US stock market. Coupang was the first Korean technology company to go public here in more than a decade. Jay Ritter, a professor at the University of Florida Business School who studies the IPO market, says only six Korean technology companies went public in the U.S. market, all from 1999 to 2006. This list actually includes Gmarket, a e-commerce that went public in 2006 and was purchased by eBay for $ 1.2 billion in 2009. eBay has announced it is looking for a buyer for its Korean business. None of the best known Korean technology and production companies – Samsung,

IG,

Hyundai Motor,

That,

SK Hynix

“They have records in the United States.”

Jett believes the Coupang deal will be a turning point for the Korean venture capital market. She says there was a misconception that Korean technology companies were not innovative enough. “That door has been blown out now,” she says. “It will change the way Korean companies are financed. This is just the beginning. ”

Write to Eric J. Savitz at [email protected]