The ultimate drive to please customers is showing up in the numbers. Coupang is growing very quickly and is already reaching profitability, a rare combination that shows something… Revenue grew by 90% in 2020 and operating margin is fairly close to profitability. All metrics point to a company that is improving. The active customer base was up 25.9% at almost 15 million in 2020 but existing customers also increased spending, a sign of intense customer focus. In short, the platform is attracting more customers, who are in turn spending more.
Investments to companies being led by their founders have a higher success rate. Bom Suk Kim owns around 9% of Coupang’s outstanding shares, indicating substantial skin in the game. After attending Harvard and gaining some other professional work experience, Kim grew Coupang from a daily deals business to an e-commerce powerhouse. He is also committed to maximizing free cash flow and not diluting shareholders.
What gives me confidence that Coupang will be the next successful ecommerce investment is that Coupang has improved the typical e-commerce experience seen in more mature markets like the United States. Of course that’s not something easy to say when Amazon still feels like a reasonably new business and e-commerce is still growing. However, Bom Suk Kim has created a one-of-a-kind experience in South Korea. If Coupang finally capitalizes on its potential, it will continue taking an increasingly larger slice of an expanding pie, making current prices look cheap. Expect volatility, size your positions accordingly, diversify by owning a large basket of promising stocks and be ready to enjoy the fruits of your long-term patience.
