Coupang Raises 4 Trillion Won, Becomes No. 2 Delivery App Overnight with Yogiyo Acquisition

Industry Leader Baemin Faces Fierce Chase
Investment and Employment Expansion Expected
Labor-Management Conflict Remains a Challenge

[Image source=Yonhap News]

[Asia Economy Reporter Kim Bo-kyung] Coupang is drawing attention to its domestic new business investment moves as it seeks to raise more than 4 trillion won (3.6 billion dollars) through its first public offering on the New York Stock Exchange. If Coupang uses the investment funds to acquire Yogiyo, Coupang Eats, currently the third-largest food delivery app, would instantly rise to second place.

According to Bloomberg, Coupang announced on the 1st (local time) through documents submitted to the New York Stock Exchange (NYSE) that it plans to raise up to 3.6 billion dollars, equivalent to more than 4 trillion won. This is about four times the previously known plan to raise 1 billion dollars. It is the fourth-largest amount ever raised by an Asian company listed on the U.S. stock market, and it is expected to solidify its position as a global company that has grown in the Korean market.

Coupang is known to invest in new businesses such as the delivery app Coupang Eats and the online video service (OTT) Coupang Play through this large-scale fundraising. According to market research firm Nielsen Korea Click, as of September last year, the market share of delivery apps by users was Baedal Minjok 59.7%, Yogiyo 30.0%, Coupang Eats 6.8%, and Wemakeprice O 2.28%.

German company Delivery Hero (DH) must sell Yogiyo by August this year according to the conditions set by the Korea Fair Trade Commission for the acquisition of Baedal Minjok. The investment industry expects that if Coupang, which has secured financial resources, acquires Yogiyo, it will fiercely chase Baedal Minjok, the number one delivery app.

Coupang Play will live broadcast matches of Tottenham Hotspur, a Premier League team in the UK to which player Son Heung-min belongs, starting this month. Coupang paid members (Wow Membership) can use Coupang Play without limits. Coupang is expected to focus on strengthening Coupang Play’s competitiveness by exclusively contracting various sports broadcasting rights.

On the 3rd of last month, in front of Coupang headquarters in Songpa-gu, Seoul, a participant held a 'Request for Dialogue' during a press conference held by Rider Union, the labor union of delivery drivers.
[Image source=Yonhap News]

Coupang also plans to continue aggressive investment and employment expansion in the existing e-commerce market. It is expected to expand and automate logistics centers to increase the Rocket Delivery areas. In addition, Coupang will expand its overseas direct purchase service (Rocket Direct Purchase), which was limited to the U.S., to China to diversify product categories. Coupang has announced plans to hire an additional 50,000 employees by 2025, accelerating manpower input.

However, the ongoing labor-management conflicts remain a challenge Coupang must resolve. After Coupang Eats decided to reduce the basic commission paid to riders (delivery agents) by 600 won, some riders are preparing to take collective action called a ‘group leave’ in protest against the commission cut on the 2nd. A Coupang Eats official said, "Since riders support orders as they come in, it is difficult to accurately grasp the number of participants in the leave."

Coupang showed a passive attitude toward labor rights issues, such as not recognizing industrial accident compensation for a day laborer who died while working at the Chilgok logistics center in Gyeongbuk last October. Last month, a woman in her 50s who worked overnight at the Dongtan logistics center was found dead. Over the past year, five workers have died in accidents at Coupang logistics centers. Labor unions and others claim that poor working conditions and brutal labor intensity are problematic. Coupang has countered some issues as "malicious claims," but inspecting work environments and improving the employment structure centered on non-regular workers remain challenges and the biggest risks Coupang must address.