Coupang is South Korea’s Amazon.com, but perhaps even better.

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The more I learn about

Coupang,

the more I want to move to Seoul.

South Korea’s largest e-commerce company, Coupang (ticker: CPNG), went public last week in spectacular fashion. Now it is the second largest publicly traded company in the country, behind only

Samsung Electronics.

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

Alibaba Group Holding

in 2014, and the largest new US edition of any kind since

Uber Technologies

in 2019.

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

Amazon.com

most Instacart,

DoorDash,

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 geographical advantages. South Korea is a super-dense, highly populous country with a great knowledge of technology, with more than 50 million inhabitants. Eric Kim, who served on Coupang’s board from 2011 to 2017 as managing director of Maverick Capital, an investor in the company, notes that South Korea has almost the same amount of land as Indiana – but almost 10 times the population. Remove the uninhabitable mountain regions, he adds, and all these people will be huddled together in an area the size of Rhode Island.

This high density helps make Coupang super responsive. The company has 25 million square feet of storage space, spread across 100 locations in more than 30 cities. Coupang says that 70% of Koreans live less than 11 kilometers from one of their distribution centers. Almost everything can be ordered on the same day, and “delivery at dawn” ensures that goods ordered until midnight are delivered by 7 am.

Coupang also eliminated the need for cardboard and bubble wrap in 75% of deliveries. (Let’s see if you do that, Amazon.) Coupang Fresh, the company’s market-leading online grocery service, ships goods in reusable containers – leave them at the door and they are picked up by one of the 15,000 team members. Coupang delivery for reuse. Return of goods? Leave them outside your door – no special packaging or printed labels needed.

Coupang had revenues of US $ 12 billion in 2020, an increase of 91% over the previous year, as the pandemic helped to accelerate the growth of 55% in 2019 and 69% in 2018. The growth was above 90 % in each of the last four quarters.

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

In the IPO, Coupang sold 130 million shares at $ 35 each. The shares started trading at $ 63.50, giving the company a market value of $ 114 billion. The stock then fell, closing on Thursday at just under $ 50 each, for an almost timid valuation of $ 90 billion.

Coupang’s shares are not cheap –

eBay

(EBAY) has comparable revenues and less than half of the market capitalization. And the shares are traded with a small premium compared to Alibaba (BABA), based on sales from the previous 12 months. But Coupang has some distinct advantages. Alibaba faces strong competition from companies like Pinduoduo and

JD.com.

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

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

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 portfolio of ventures founded in 2016, invested another $ 2 billion in a business led by Lydia Jett, an executive of the Vision Fund which is now on the board of Coupang. The original investment was transferred to Vision Fund, for a total stake of $ 2.7 billion. That bet is now worth $ 30 billion. It is a monstrous victory – and possibly the greatest outlet of all time for a business led by a venture capitalist.

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

“We are prepared to keep Coupang for a long term,” says Jett. “A lot of space remains in a $ 500 billion retail market.”

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

LG,

Hyundai Motor,

Kia,

SK Hynix

—Have US listings.

Jett believes the deal with Coupang will be an inflection 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 off,” she says. “This is going to transform the way Korean companies are financed. This is just the beginning.”

Write to Eric J. Savitz at [email protected]