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Coupang: Korean E-Commerce Craze - [Business Breakdowns, EP.169]
Business Breakdowns
Logistics Infrastructure Investment and Membership Benefits in E-Commerce Business
Building a robust logistics infrastructure involves significant capital investment, as evidenced by similar ventures like Amazon. Initially, companies can experience negative cash flow while developing this infrastructure, but profitability can eventually be achieved, as seen in 2023. In concentrated markets such as South Korea, where delivery systems can be optimized for population density, companies can achieve rapid delivery with comparatively lower investments. The success of e-commerce businesses relies not only on logistics but also on the effectiveness of membership programs. In South Korea, for example, 14 million consumers participate in a membership program, which offers attractive benefits such as free delivery and discounts on food and streaming services. Membership retention and customer spending correlate positively, with data indicating that increased usage of services leads to lower churn rates and higher annual revenue per buyer, highlighting the value of comprehensive service offerings in enhancing customer loyalty.
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