Coupang aims to create exemplary culture
.jpg?w=728)
Coupang CEO Kim Bom
By Chung Hyun-chae
Unlike most social commerce sites that have faded away over the past few years, Coupang has managed to survive fierce competition and become Korea’s largest social commerce operator.
Many people are surprised to know how the company has achieved such explosive growth in a short period of time since its foundation in 2010.
Coupang CEO Kim Bom cites the firm’s unique corporate culture, built on five core values; “wow,” “believe,” “focus,” “fail fast” and “be open,” as its most important success factor.
Kim in particular stresses the wow factor while explaining Coupang’s goal to create a model corporate culture during an interview with The Korea Times’ Business Focus in his office in southern Seoul.
“We regard employees as a customer within the company, while people who buy our products are external customers. We always try to wow both customers inside and outside,” said Kim.
In order to please external customers, Coupang operates an innovative customer service center. For instance, the center is the only one in the social commerce industry that is open on weekends in a bid to better cater to customer needs, while none of its competitors do.
“As our staff at the service center directly communicate with customers, we spare no efforts to properly educate them,” said the CEO.
Coupang also has various compensation policies in cases of customer inconvenience, including delays in delivery and absence of stock.
Thanks to its customer-oriented culture system, the number of online customers jumped to 22 million in 2013 from 7,000 in 2010. The company’s transaction volume accordingly reached 1.2 trillion won ($1.1 billion) in 2013, up from 6 billion won in 2010. Coupang was the country’s first social commerce operator that surpassed one trillion won in sales.
Employee loyalty powers explosive growth
Coupang’s rapid growth is thanks to not only its effective product procurement and customer management, but also its dedicated and hardworking employees.
For example, on Christmas Day, about 30 employees voluntarily headed to logistics center to pick up the products and delivered them to the customers, some of whom were in a Santa Clause costume.
When asked about what makes Coupang employees devote themselves to the company, Kim attributed this to Coupang’s culture, which puts priority on customer satisfaction.
“Once, our board of directors handed out the energy drink Bacchus to all employees on the first day of 2011 as part of efforts to boost employee morale. This has become an annual ritual for the first working day of the year,” the CEO said.
“Besides this event, the company holds a number of what I would like to call creative events throughout the year,” he added. Among them are “Make Friends,” a day of having lunch with others from different departments, “Cou-Day,” a day for employees to spend time on cultural and leisure activities, “Praise Relay,” an event of complimenting each other.
“What’s astonishing is the fact that all these events were proposed and organized by employees themselves. As they derive pleasure from other’s happiness, they are showing a great deal of willingness to wow customers. This is the engine behind Coupang’s fast growth,” Kim said.
Serve customers better than offline stores
Coupang’s corporate culture of treating its employees the same as its customers has encouraged the former to do more to cater to every single need of the latter, according to Kim.
The norm is that brick and mortar retailers offer better quality service than online stores. This is because salespeople at offline stores deal with customers in person, while those of online stores communicate with customers either on the Internet or by phone.
“If regular customers do not come to a store, a clerk notices it immediately and deals with it. But it is difficult for online-based retailers to sense the absence of customers,” the CEO said.
“Also, it is easy for online stores to feel closer to partner companies than customers because they work with them in person. In Coupang’s case, however, as we try to treat employees as good as customers, our workers are more motivated to provide better services,” he said.
Coupang’s real competitors are not offline stores but online shopping channels and open market operators such as Gmarket, Auction, and Interpark.
With online shopping malls and open market giants dominating the online retail market, fledgling social commerce companies, including Coupang, have faced difficulties in competing with them. Early social commerce companies were focusing on niche markets, such as group discounts on concerts and other performances.
As a growing number of shoppers have become tired of similar products listed on open markets, social commerce sites that recommend a few selected products have begun gaining an edge in the online retail industry.
“Open market is an intermediary place where individuals and vendors trade goods. As this kind of shopping channel makes money by charging a commission on sellers in turn for providing the market to sell, they see the customers as advertisers,” the Harvard graduate explained. “Being a seller, not a mediator, Coupang can regard customers as real customers.”
Amazon to face difficulty in Korea
Now it’s time for local retail industries to prepare for future rivals such as Amazon, the world’s largest online retailer, according to Kim. Amazon is likely to make inroads into Korea in the near future, raising the stakes for local players.
Despite the prevalent market fears over Amazon’s entry, Kim presented another view, stressing the distinct characteristics of the Korean market.
“Korea is one of the toughest markets for foreign companies to penetrate. The world’s No. 1 retailer Walmart failed to take root in Korea. Google, the most visited website in the world that runs more than one million servers in worldwide data centers, is having a tough time, lagging behind local portal sites Naver and Daum,” he said.
“In order to survive and become a major player in Korea, companies should aim to localize, which is the most crucial factor in the local market,” the CEO said. “International name value no longer guarantees success in the domestic market.”
Explore overseas ventures
Despite its strong upside, the CEO kept quiet about Coupang’s overseas expansion. Instead, Kim stressed that the Korean market is larger than many people think. He said Korea became the seventh country to join the “20-50 club,” a group of countries with a population of 50 million and per capita income of $20,000.
“Considering Korea’s economic power, it is important to satisfy Korean customers,” Kim said while applauding Korea’s high service quality.
“Most foreigners coming to Korea are usually surprised by how they are treated at offline stores. Yet unfortunately, they are not impressed by services of online stores. Our goal is to provide the same quality online services to these customers,” said Kim.
“Though Coupang has yet to complete building a model corporate culture. We are going to continually try to build a world-class corporate culture and create state-of-the-art online customer service system. If we can satisfy Korean customers, I believe we will succeed anywhere in the world,” Kim said.