Korean e-commerce companies are turning into foreign-invested enterprises. After the world’s largest social commerce site Groupon bought TMON for US$260 million at the end of last year, a Silicon Valley-based venture capital firm made a US$100 million investment in Coupang on May 29. Previously, eBay, one of the big three e-commerce companies in the world, bought Auction and Gmarket and entered the local market.
On May 29, social commerce site Coupang announced that it raised US$100 million in funding from investors led by US-based venture capital firm Sequoia Capital. It is the first time for the US firm that invested in Apple, Google, Cisco, and YouTube in the past to make a large-scale investment in a Korean e-commerce company. In particular, Mike Moritz, chairman of Sequoia Capital, who is renowned as a successful investor in Silicon Valley, led the investment effort.
“Coupang provided us an opportunity to examine the Korean market,” said the chairman in an interview with the New York Times. He added, “Korea’s outstanding technical skills will make the country become one of the biggest e-commerce markets in the world, after China.”
The Korean online retailer said that the amount of investment is not big enough to affect its current shareholding rates. Sequoia Capital valued Coupang at over 1.3 trillion won (US$1.27 billion), which is similar to the number for the nation’s top messaging company Kakao. It means that there is growing recognition that the Korean e-commerce market will become one of the major markets in the world.
In fact, the local e-commerce market grew rapidly to reach 38.494 trillion won (US$37.724 billion) last year, and the social commerce market in particular, amounted to 4 trillion won (US$3.9 billion), helped by strong growth in the mobile arena.
Thanks to strong growth like this, Coupang’s competitor TMON was acquired by Groupon at the end of 2013. The purchase price was US$260 million. Coupang’s value is nearly five times as high as that of TMON, which shows that the Korean e-commerce market has grown in stature.
Given that Amazon, the world’s largest e-commerce retailer, and Alibaba, China’s leading e-commerce company, are also planning to penetrate the local market this year, global e-commerce giants are expected to wage an all-out war to take initiative in the Korean market.