[Coupang AI Power]①"Uncannily Accurate Recommendations"... The Secret Is Big Data

Analysis of Coupang Usage by a Woman in Her 40s Living in Yongin, Gyeonggi Province
AI-Based Product Recommendations... Targeting Repeat Purchases
15 Years of Accumulated Data Enables Precise Recommendations
Increasing App Engagement Time... Expanding Market Dominance

'Shopping Queen' (nickname, 44), a working mom living in Yongin, Gyeonggi Province, describes herself as a self-proclaimed Coupang addict. She purchases almost everything except fresh food and groceries from Coupang. Recently, she has also started ordering food through Coupang's delivery application. On weekends, she watches drama series and movies on Coupang's video streaming (OTT) platform, Coupang Play.

On June 9, Asia Economy analyzed the usage records of the three major Coupang apps (Coupang, Coupang Eats, Coupang Play) for Shopping Queen over the past month. The number of shopping transactions made through Coupang reached 39. The total payment amount was 661,758 won. From April 15 to April 19, she placed orders every day, and even after that, she shopped almost every other day.

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Purchase History Analysis... Uncovering Hidden Consumption Patterns

The purchased items ranged from high-elasticity pantyhose and mobile phone accessories to children's sneakers. The cheapest item was a powder pact puff ordered on May 14 (4,750 won), while the most expensive was organic cold-pressed Jeju carrot juice (43,200 won). Most other items were priced between 10,000 and 20,000 won. This reveals the consumer's preference for 'value for money' over high-end brands.

Coupang also recommends products through an AI algorithm that reflects such purchasing history and consumer preferences. This led to additional purchases. On May 1, after using a 'bamboo golf tee' for the first time at a golf course and liking it, Shopping Queen immediately opened the Coupang app, searched for it, and placed an order. On the same day, she also purchased a Boston bag in the 20,000 won range after seeing it in a popup ad.

Additionally, on May 9, while buying children's pants, she also ordered a children's sweatshirt. This was due to a product recommendation that appeared right before checkout. Shopping Queen said, "I could just buy what I need and finish, but when I click, similar products appear, and then I see items that are a few hundred won cheaper, so I can't help but click. The number of items I purchase has increased compared to before."

AI is also utilized when canceling or returning products ordered from Coupang. On April 23, Shopping Queen purchased Holberry organic lemon juice (12,320 won) after it was recommended as a suggested product, but changed her mind and canceled it with a single click. On May 5, after receiving a stretching yoga band she had ordered and not liking it, she contacted customer service and requested a return. Since 2023, Coupang has introduced the industry's first 24-hour customer center channel that enables AI-powered agent connection and a one-click inquiry system, allowing users to handle returns, exchanges, refunds, and agent connections all through the Coupang app.

Her Coupang Eats usage over the month was not high. However, from May 5, she used Coupang Eats for two consecutive days to have iced Americanos and other drinks delivered from Starbucks, and also ordered dumplings and naengmyeon from School Food and a naengmyeon specialty restaurant, mainly ordering Korean snack foods. The total payment amount was 103,800 won. On Coupang Play, she watched Coupang original series such as Newtopia, Family Planning, and Anna, as well as movies from the 2000s like Ripley, Sex and the City, and Ghost. Including her Coupang Wow membership fee (7,890 won), Shopping Queen spent a total of 741,328 won on Coupang over the month.

15 Years of Accumulated Consumer Data... Winning the AI Power Game

Coupang has emerged as the most notable company in the era of artificial intelligence (AI). Coupang has grown into the number one e-commerce platform in Korea through AI-driven Rocket Delivery and logistics innovation. In addition, by analyzing 15 years of accumulated consumer data?such as purchase history, search patterns, and product reviews?using AI algorithms, Coupang recommends personalized products and deeply integrates itself into individuals' lives. By also covering personal eating habits and content preferences, Coupang has secured the most commercially valuable data, giving it an edge in the global AI power game in which tech companies around the world are competing.

Consumers encounter dozens of recommended products every time they access the Coupang app. Information on discounts for fresh foods such as fruits, beauty and household products previously purchased or considered, and products similar to past searches are automatically displayed with images. Related information is also frequently sent via text message, email, or mobile notifications, as registered in customer information. This is Coupang's strategy to encourage platform revisits, repeat purchases, and foster loyal customers.

Through users' activity records, Coupang can infer not only the products consumers wear, eat, drink, and frequently use, but also detailed information such as consumption patterns, interests, purchasing power, and family composition. An industry insider stated, "Aside from mobile carriers with the majority of the population as subscribers, there are very few companies that have secured as much customer data as Coupang."

These features are made possible by the massive big data generated by Coupang's more than 33 million monthly active users (MAU). According to consumer data analysis firm WiseApp Retail, as of last month, Coupang's MAU was 33.39 million, ranking first among comprehensive mall apps. As of the first of last month, Coupang also led in daily active users (DAU) with 14,922,696.

The number of customers who have purchased a product from Coupang at least once was 23.4 million in the first quarter of this year, a 9% increase from 21.5 million in the same period last year. As of 2023, 32.46 million people had installed the Coupang app, and paid membership subscribers reached 14 million. Considering that some users share accounts with family members, it can be said that virtually the entire population has used Coupang's services.

Coupang's AI recommendations, based on this vast amount of data, contribute to increasing accuracy. As the accuracy of recommendations tailored to users' preferences and behavioral patterns rises, consumers' time spent on the app increases. Since last year, Coupang's app usage time has shown an upward trend.

According to Mobile Index by data platform company IGAWorks, Coupang's average usage time (time spent) per user peaked at 137 minutes in March 2021, when COVID-19 was rampant. This was due to a surge in e-commerce platform usage as offline outings were restricted. The average app usage time per user is calculated by dividing the total monthly app usage time by the number of monthly active users (MAU).

However, after the transition to endemic in 2022, as consumption dispersed to offline stores, Coupang's average usage time dropped sharply to around 98 minutes. But since 2023, it has been on the rise again, recovering to around 127 minutes as of March. As AI-powered recommendation technology becomes more sophisticated, more consumers are spending longer periods on the app.

Coupang's average app usage time (time spent) per user is 127.87 minutes, overwhelmingly higher than other shopping apps. This means that, on average, consumers spend about two hours per month on the Coupang app. In comparison, Chinese e-commerce platforms (C-commerce) Temu and AliExpress recorded 98.43 minutes and 74.58 minutes, respectively, while SSG.com and Gmarket posted 41.35 minutes and 41.32 minutes. Naver Plus Store's average usage time was 27.55 minutes. Naver Plus Store, a shopping platform powered by Naver's AI technology, was first launched on March 12.