Coupon is most often compared to Amazon. It has an outsized share of its local
e-commerce market. A similar efficiency at all costs
business model and a host of highly automated fulfillment centers like this
one in Tango. Its newest and largest, three and a half
million square feet of floor space spread out over 12 stories.
Think nearly 50 football stadiums stacked on top of each other and side by
side. But its size is not its only signature.
It stands out for its A.I. driven army of robots, from heavy
hauling merchandise movers to driverless forklifts and scurrying sorters that
navigate by QR codes in the floor and on pillars that get 99 percent of all
orders delivered within a day. All this speed to customer has come at a
cost. Coupon backed by Japan's Softbank has
burned through cash, losing billions, building more than 100 fulfillment and
logistics centers across South Korea with more planned.
This one cost a quarter of a billion dollars.
We've invested billions of dollars to really building this network that is
integrated in between all the logistic steps in the supply chain.
And how important is it that Kupang is end to end?
So you have the e-commerce, you have the fulfillment and you have the logistics,
the delivery. You know what?
That's are actually a differentiator with our compatriots.
Why? Because of we own and operate the entire
process. Still, investors remain cautious as
shares have lost two thirds their value since coupons post New York IPO high in
March of 2021. Every tech company around the world
knows Cookie Boss saving the cost. Common Property is one of the few tech
company that is still adding headcount. We're actually third largest employer in
Korea and we continue to hire people. But their job becomes more easier and
becomes more like a control or a type of task.
We have these are sorting boards that are basically eliminating all of the
carrying and most of the lifting involved being conventional locations
removed, all the heavy lifting haven't. Exactly.
Going forward, the real heavy lifting might be in its plans to go overseas
where they currently have only minor footprints in Taiwan and Japan.
Global expansion is not very easy. This market is already very crowded.
A lot of companies like Amazon, Alibaba, even Tick Tock wants to do its own
e-commerce. For now, the focus seems to be on this
factory floor, not future ones further afield.
These forklifts are equipped with a vision technology that looks at these
marks and knows exactly their locations and where they need to move to.
And they always obey. They do.
It's a machine. It's a program level.
So they do what you tell them to do. Got it.
All right. Let's wait and see if he joins us now.
Phone day. Good, Steve.
Great to have you. And just such interesting visuals,
right? What was what was that kind of the
standout element to you in terms of what you saw?
Well, I. I think it's these sorting bots that are
behind me that kind of scurrying around. It's kind of the last mile of the
organization chain here in the fulfillment center before the packages
go onto the trucks. And essentially, you know, they get
navigated around this area by QR codes that are in the ground or in the floor.
They don't run into each other because it's all pre-programmed.
And according to E.J. Choi, who we spoke to yesterday, they
don't have any mishaps. And that helps reduce the human error
and, of course, improves that efficiency.
So this is part of that speed customer equation that has helped coupon turn to
an operation and profit in the calendar third quarter.
And most analysts say in the fourth quarter likely to have a second
consecutive profitability and perhaps even turn to break even on a net basis.
Sometime this year, they are adding active users.
They were up 7 percent. They also had a 10 percent increase in
net revenue. But again, there are some still
challenges on the horizon, of course, is there's still a big investment phase.
They're going to be building out several more of these large fulfillment centers.
As you said, this was about 260 million U.S.
dollars. More on the way.
The goal really is to get the goods to consumers as fast as possible.
And they have more than 100 of these across South Korea, not as large as this
one. Their fulfillment centers and logistics
centers. But 70 percent of South Koreans are
within seven miles of a distribution center like this one.
So they get the goods to people quickly. But again, as we've said, they've spent
billions to build out this automation, which is improving efficiencies.
It is improving top and bottom line. But again, there's concern about the big
parent, Softbank. We've been talking about it.
Earnings coming out later. They did divest some of their stake in
Alibaba, the bigger e-commerce competitor in China.
But again, this there's there might be some concern that they could divest some
of their 27 percent stake that they have in this company.
Coupon. Are there any plans to reach the
international consumer at some point? Well, that's a big challenge because
right now in South Korea, coupon has about 25, 26 percent e-commerce market
share. There's competitors here.
Obviously, everybody wants a part of the e-commerce pie here.
Neighbor The search engine is a big rival.
Shouldn't say that department store operator.
They want to do more in e-commerce. So there's a lot of competitors.
So at 25 percent, they still have a lot more room to grow in the Korean market,
obviously. You know, Amazon has about 50 percent in
the United States. Alibaba has about 50 percent in China.
So there's room to grow. So international expansion is more of a
challenge. There's different logistics and delivery
systems and building a fulfillment center in another country like Japan,
which they are having a beginning footprint.
And also in Taiwan, it's just the beginning.
But I think there's still more room to grow here in South Korea.