The Confidence of Innovation from '40 Trillion Won Annual Revenue' Dominating the Nation... Coupang Unshaken by Naver's Counterattack [Coupang AI Power] ②

Coupang's Logistics Innovation Story
Product Demand Forecasting Using Machine Learning
Product Storage and Transport Optimized for Worker Movement
Nationwide Kusegwon Network... Following the Amazon Role Model

March 2025. NAVER, the largest search platform in South Korea, launched the e-commerce platform application 'Naver Plus Store,' which incorporates its own generative artificial intelligence (AI). This app, powered by NAVER's generative AI 'HyperCLOVA X,' analyzes massive amounts of product data and combines it with user preferences, past purchase history, context, and intent to prioritize and recommend products that users are likely to be interested in.

Within just one month of its launch, the app surpassed 5 million downloads, and its daily active users (DAU) reached around 1 million. NAVER also plans to introduce an 'AI Agent' within the year to increase user engagement time on its shopping app. This feature will be able to understand and interpret new questions or commands on its own, enabling it to perform tasks at a level similar to that of a human.

This year, NAVER has entered the race to reclaim the top spot in South Korea's e-commerce sector by launching an AI-based shopping app. NAVER, once the leading platform in terms of domestic e-commerce transaction volume thanks to its search engine dominance, was overtaken by Coupang during the COVID-19 pandemic due to Coupang's fast delivery services. Most analysts predict that Coupang will maintain an advantage in the upcoming third-generation e-commerce war, which will be driven by AI. This is because Coupang has invested early in AI-based logistics systems, building a nationwide 'Kusegwon (one-day delivery)' network capable of same-day delivery across the country.

From Order to Rocket Delivery... AI-Driven Logistics Innovation

Last year, Coupang recorded sales of 41.2901 trillion won, surpassing 40 trillion won in annual revenue for the first time in the retail industry. This figure far exceeded the combined total sales of domestic department stores (40.6595 trillion won) and large discount stores (37.1779 trillion won). Starting as a startup in 2010 with only 3 billion won in capital, Coupang overtook traditional offline retail giants in just 14 years.

The driving force behind this explosive growth is Rocket Delivery, Coupang's logistics innovation. Coupang's logistics system is a culmination of AI technology. From the moment a customer places an order, every step?checking quantities and inventory, receiving, shelving, picking, packing, and shipping?utilizes AI and big data. Each procedure involves countless variables and decisions, and AI processes trillions of data points daily to improve operational efficiency and reduce delivery times.

Unmanned transport robot (AGV) delivering products to workers. Provided by Coupang

Coupang uses AI from the very beginning of logistics management, analyzing inventory and customer demand to manage warehouse space efficiently. Based on accumulated sales data, machine learning is used to predict demand for tens of millions of products. Quickly identifying how much of each product is in which fulfillment center is the first step to reducing delivery times.

The storage of over 500 million products is also managed through big data analysis. Although unrelated product categories may appear to be mixed together in a seemingly disorganized way, this is a thoroughly calculated strategy to minimize worker movement. Coupang's AI algorithm uses a method called 'random stow,' which considers each product's sales volume, sales period, and the likelihood of being ordered together, to place related items close to each other.

Robots are used to move ordered items to the packing stations. 'Picking robots (AGVs),' which resemble robotic vacuum cleaners, read barcodes on the floor and transport shelves with products to the workers. Additionally, a blue light indicates the exact compartment where the item to be packed is located.

Sorting robots used for classification tasks with ergonomic design. Provided by Coupang

In the packing stage, the automatic packing machine 'Auto Bagger' assists workers. All workers need to do is place the item in a plastic bag; the system automatically attaches the shipping label and seals the package. Once packed, products are placed on a 'Sorting Robot,' which scans the shipping address and sorts items by region within seconds.

In the shipping stage, delivery staff use handheld devices (PDAs) equipped with AI systems to guide them along the optimal delivery route. Coupang also operates a 'singulation packaging' system, which groups products for nearby destinations into a single box to reduce the time needed to locate and unload items from the delivery vehicle.

Coupang Follows the Path of Its Role Model, Amazon

Coupang's AI assistant PDA. Provided by Coupang

Coupang's business model, which leverages fulfillment and algorithms, closely resembles the growth model of Amazon, the world's largest e-commerce platform. Among global retail companies, Amazon currently possesses the most advanced AI technology. Amazon applies AI primarily in four areas: demand forecasting systems, logistics, product recommendations, and last-mile (final customer delivery).

The demand forecasting system predicts customer demand for products and allocates appropriate inventory to nearby fulfillment centers. Amazon's deep learning-based service 'SCOT' analyzes tens of billions of order records, weather, trends, location, and other diverse data to forecast demand for over 400 million products. Based on these demand forecasts, inventory is allocated to each fulfillment center, preventing stockouts and enabling faster delivery.

If fulfillment centers can operate without human intervention, both labor costs and delivery times can be reduced, making cost savings possible. Amazon's latest technology, the intelligent tactile robot 'Vulcan,' exemplifies this direction. Vulcan is equipped with tactile sensors. While previous warehouse robots (Kiva) transported items to workers, Vulcan can pick up, identify, and sort various items like a human, and then store them appropriately.

It can also adjust its grip strength and positioning based on the size and shape of the item. The robot moves according to AI decisions, storing items in places inaccessible to humans and retrieving them as needed in the required quantities, enabling even more precise and accurate logistics operations.

These technologies allow customers to receive their orders more quickly at their doorsteps. In the last-mile stage, Amazon also uses AI to improve delivery time accuracy and reduce delivery costs such as fuel expenses.

Coupang is also increasing investment and support for innovative technologies, filing patents in South Korea, the United States, Taiwan, and other countries. This includes AI-related technologies such as product order volume prediction, food delivery optimization, and search optimization. As of the first half of last year, Coupang's cumulative number of global patent registrations exceeded 2,100, more than 13 times the 160 registered in 2019.

Since its founding, Coupang has invested about 6.2 trillion won to secure more than 100 logistics facilities in 30 regions nationwide. As of last year, Rocket Delivery was available in 182 out of 260 cities, counties, and districts (70%) across the country, including the Seoul metropolitan area. Coupang stated, "Our goal is to invest an additional 3 trillion won by 2027 to expand Rocket Delivery coverage to around 230 cities, counties, and districts."