SoftBank-Backed Coupang, The Amazon Of South Korea, Expands Into Japan

South Korean e-commerce giant Coupang has made its first international foray in neighboring Japan, a move that was supported by investor SoftBank, according to news reports and analysts.

Coupang is offering its delivery service in Tokyo as a pilot project, the Korea JoongAng Daily newspaper reported. (Disclosure: JoongAng Group is a licensee of Forbes Media and publishes Forbes Korea.) SoftBank owns about 33% of Coupang through its Vision Fund and analysts say the Japanese conglomerate is helping its portfolio company get ahead in Tokyo.

“Coupang is starting to mature in South Korea and is looking to new markets for extra growth, such as Japan,” says Neil Mawston, an executive director with market research firm Strategy Analytics. “Japan is the home market of SoftBank, a big investor in Coupang.”

In late 2018, Coupang raised $2 billion from SoftBank Vision Fund at a $9 billion valuation. The company went public in a $4.6 billion IPO in March on the New York Stock Exchange and its market capitalization is now about $67 billion. Coupang’s founder, Bom Kim, saw his net worth soar more than sixfold after the IPO, to $6.4 billion, making him the biggest gainer on this year’s Korea Rich List.

SoftBank’s billionaire founder, Masayoshi Son, had said in March after Coupang’s IPO that he was considering bringing services from Coupang to Japan, Reuters reported.

“With SoftBank being the largest investor in Coupang, SoftBank Chairman Masayoshi Son brings his deep knowledge of the Japanese e-commerce market and sees opportunities to establish Coupang’s footprint within the domestic Japanese e-commerce market,” says Rajiv Biswas, Asia-Pacific chief economist with IHS Markit.

Japanese consumers, like those in much of the world, have swung toward e-commerce over the past year as more people stay at home due to the Covid-19 pandemic. Japan, with a population of about 125 million, happens to be one of the world’s largest consumer markets, Biswas says, and the “rapid shift towards e-commerce has created a window of opportunity for well-financed entrants like Coupang to compete in the Japanese e-commerce market.”

Coupang can stand out in Japan by using its seven-year-old artificial intelligence-led Rocket Delivery quick-delivery service to challenge Japanese e-commerce rival Rakuten and the global services of Amazon, Mawston says. Rakuten, founded in 1997 by Japanese billionaire Hiroshi Mikitani, also has businesses in fintech, mobile and internet services.

But Coupang will find it hard to expand Rocket Delivery in Japan beyond Tokyo without “major” spending, Mawston says. “Coupang can focus first on Tokyo and its huge 14 million population, but rolling out to the next 10 or 100 big cities in Japan would require major spending,” he says.