Coupang gains 1.1 trillion won from SoftBank

Coupang has raised 1.1 trillion won ($1 billion) from Japanese wireless carrier SoftBank Corporation, the leading Korean e-commerce firm said on Wednesday.

The investment, once closed next month, will value the company at around 5.5 trillion won, and SoftBank is expected to control 20 percent, according to sources with knowledge of the deal.

SoftBank’s investment follows $300 million from the U.S. fund manager BlackRock last November and another $100 million from Silicon Valley venture-capital firm Sequoia Capital in May of last year.

Coupang, whose annual sales topped 2 trillion won last year, operates both a daily deals service and a third-party market place. It controls the entire retail process from inventory stocking, managing logistics centers to product deliveries.

The company delivers most of its products within a day after the order is placed, a feature that sets it apart from its rivals that rely on third-party logistics companies for delivery.

Mobile transactions account for an average of 75 percent of its transactions in terms of sales, and the number of its app users amount to 25 million - nearly one in every two Koreans.

Coupang said it will use the money raised on logistics and technology.

The company has plans to build a new logistics center in Incheon measuring 99,173 square meters (24.5 acres), which would be the biggest in the country. It also plans to double the number of its logistics centers to 16 from its current eight.

To keep up with rising demand for its “rocket delivery” service, the company will also hire 800 more delivery personnel.

“Coupang has set new standards for e-commerce as we stand responsible for every step of online shopping,” said Bom Kim, the CEO and founder of Coupang, in a statement.

Kim added that Coupang will offer comprehensive retail options for consumers, where “almost everything you can think of can be bought at Coupang.”

The company has R&D centers in Shanghai, Seattle and Silicon Valley, and has 5,500 employees. The company is not yet listed.

Meanwhile SoftBank’s CEO Masayoshi Son said in a statement he “will tap new growth by investing in Internet companies and supporting innovative entrepreneurs.”

“We will support Coupang so that its e-commerce business can innovate further.”

Son has a track record of making profitable investment decisions in Internet start-ups. In 2000, the value of his investment in Alibaba of about 20 billion won in Korean currency, has jumped to 60 trillion won as of end-2014.

And in 2013, he acquired a leading U.S. wireless carrier Sprint.

“Given Coupang’s current loss-making businesses, Son probably thought very highly of Coupang’s new business model of combining a mobile platform with logistics,” said Lee Na-ri, an executive at Cheil Worldwide.

BY PARK JUNG-YOUN, SHIM JAE-WOO[park.jungyoun@joongang.co.kr]