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Home Supply Chain E-commerce

Coupang set to begin operation in Singapore

by Team Logistics Asia
July 2, 2021
in E-commerce
Coupang set to begin operation in Singapore
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Coupang is set to begin operations in Singapore, as the NYSE-listed entity is said to have completed the hiring of senior executives in the Southeast Asian country, sources and officials said Friday.

“Coupang completed the hiring of senior roles such as heads of retail, logistics and operations in Singapore. It also hired below C-suite executives in roles such as logistics, marketing and IT,” a company official said.

The hiring is interpreted by market observers as Coupang’s intention to use the Singaporean market as a “litmus test” for its detailed Southeast Asia-focused growth strategy. In Southeast Asia, Alibaba is leading the e-commerce market.

When it comes to total market size, Singapore isn’t considered as attractive, as its total population is below a meager 6 million. But in terms of testing its service, given the higher technology literacy of the Singaporean public, the city state could be the “right fit” to gauge the marketability of any advanced tech-driven services for companies that hope to win the larger Southeast Asian market with a total population of 650 million.

Coupang’s signature Rocket Delivery service offering same-day delivery is considered ideal for densely populated areas, as the system requires an advanced digital logistics system and fulfillment or distribution centers close to metropolitan areas.

A source familiar with the issue said one of Coupang’s local investors in Singapore ― Singapore Press Holdings (SPH) ― may increase its investment in the company as a financial backer. SPH invested some $3.9 million “indirectly” in Coupang back in 2014 through a special purpose vehicle.

The total annual volume of transactions in Southeast Asia’s e-commerce market, according to the e-Conomy SEA 2020 report co-published by Google, Temasek and Bain & Company, reached $62 billion last year, up 63 percent from 2019. The report added the market will expand to $172 billion by 2025.

Investors are paying attention to whether its expansion plans will ease their concerns over Coupang financials.

As well as in Japan and Singapore, Coupang is trying to unlock additional opportunities for growth in Malaysia. Its Southeast Asia-focused expansion plans do make sense in terms of investors’ viewpoint as its value proposition mostly relies on its operating in large, densely populated urban centers like its hometown Seoul.

It has already built an end-to-end logistics network with its own warehouses, delivery drivers and tech systems. This company-owned network within these urban centers makes it possible for Coupang to add services on top of its core e-commerce offerings, like food and grocery delivery.

“Coupang try to replicate this model when it launches services in these new target markets. But the point is it will face competition from already-strong players in Southeast Asia such as Shopee and Lazada as they already have large market caps and a lot of money to invest,” an industry official said on condition of anonymity.

“Coupang is intending to replicate Amazon’s success by adopting a similar model in different Asian countries. If it is successful with these scheduled expansions into Japan, Singapore and Malaysia, Coupang could be on its growth trajectory and address investors’ concerns over its stocks’ current high valuation.”

Tags: CoupangEcommerceLogisticsSingaporeSoutheast AsiaWarehousing

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