Coupang's Logistics Centers: Power Struggle and Mutual Benefits

Coupang faces a 1.4 trillion won fine for search ranking manipulation, plans to appeal, and is at the center of a complex market competition.

### Coupang's 1.4 Trillion Won Fine and the Ongoing Distribution Market War
* 🔍  Coupang was fined **1.4 trillion won** for manipulating search rankings for PV products and inducing reviews, and they announced their intention to **appeal the decision**.
* 🏗️  They planned to invest **22 trillion won** to expand logistics centers and establish new fulfillment centers in **eight locations by 2026**.
* 📦  Coupang's logistics centers enable fast delivery by directly sending items from the centers to customers, and this system is **crucial for their market dominance**.
* 👩‍👦‍👦  They create a **significant number of jobs** through logistics center construction, leading to a **boost in the construction industry** and a **decrease in the unemployment rate**.
* 🪧  The country and Coupang have a **mutually beneficial relationship**, but the sudden imposition of a fine **strained their ties**.
* 🌐  The distribution market is in a fierce competition, with domestic and foreign players forming alliances and **devising strategies to gain an edge**.
* 🏆  Coupang is facing a critical moment as they need to **quickly increase new customers** to compete with strong rivals like AliExpress.
* 🌍  The situation in the distribution market is **complex and dynamic**, resembling an international story, so it is important to **look beyond the surface** of the incidents and observe how the situation **unfolds**.

With the recent issue of Coupang's ranking manipulation, they were fined 1.4 trillion won. They manipulated search rankings for PV products, induced reviews, and now faced a 1.4 trillion won fine. Coupang immediately announced their intention to appeal. They mentioned that such incidents can occur among companies, which may explain their stance. Another piece of news emerged. They might even shut down Rocket Delivery, showing resistance against Coupang. There was a groundbreaking ceremony for a logistics center in Busan to the extent that canceling it was deemed a threat to the public. Additionally, the groundbreaking of logistics centers in Gyeonggi Province and Gimcheon, Gyeongsangbuk-do, was indefinitely postponed. It seems like a display of powerlessness. Why would it be seen as powerless? These logistics centers are beneficial for Coupang, but they bring immense benefits to the nation as well.

Because they said they would take care of the nation's benefits, they are threatening with military action. Coupang had plans to establish new fulfillment centers in eight locations including Gimcheon, Jaecheon, Bucheon, Icheon, Cheonan, Daejeon, Gwangju, and Ulsan by 2026 and invest in facilities. Since the number of orders coming in through Coupang continues to increase, it becomes overwhelming. Therefore, they planned to invest 22 trillion won to further expand logistics centers in order to expand even to areas where early morning delivery is not covered. However, it could be stopped. Coupang was able to provide fast delivery because of its logistics centers. When an online order is placed, the item is immediately sent out from the logistics center, not a system where it comes in and goes out to the seller, but where the seller has the item in advance and it goes out from the logistics center directly.

I sent it, so it was a system that allowed same-day delivery and dawn delivery. On the other hand, in other places, sellers send the parcel through hubs, taking more than a day. People prefer faster delivery if the price is the same. Especially for fresh food, it needs to be delivered quickly for peace of mind. That's why Coupang was able to quickly dominate the market. However, some may argue that if there are construction delays, it could affect Rocket Delivery. But the bigger issue is the employment created when Coupang builds logistics centers. They invest 2 to 3 trillion won in construction, creating a significant number of jobs. This leads to a boost in the construction industry, providing valuable work opportunities. Approximately, for every 1 billion won spent on logistics center construction, one job is created. Even just what comes out on the screen is impressive.

Now, thousands of jobs are already being created, so Coupang continues to expand its logistics centers and hire more people from these centers. From the country's perspective, as more jobs go to Coupang, the unemployment rate is expected to decrease. Ultimately, the country and Coupang can be seen as mutually beneficial. However, since the country is trying to impose fines, from Coupang's perspective, they might wonder why the mutually beneficial relationship has turned out like this. In my opinion, when I look at Coupang's early morning delivery area, it seems like the logistics center is still lacking. Therefore, I believe that Coupang, even though they are powerless at the moment, will not stop or suspend the logistics center. Eventually, it is an environment that they have to build. If we calculate the increasing logistics in the future and the areas that need to be covered continuously, there will be eight areas.

I think it's a situation where we need to build all the logistics centers first and continue later. Of course, with the current scope, it can cover about 30 million people in the population, but due to the attacks of Ali and Taemu, it has become more important to secure the logistics center faster. Therefore, it would be difficult to cancel the logistics center. Right now, it's not a bit uncomfortable to express, isn't it? If Coupang secures the logistics center first, it will be able to deliver nationwide quickly. And they will lock it with Coupang membership. So, even if Ali and Teu attack, they might be able to maintain Coupang's territory to some extent. Therefore, Coupang needs to expand the logistics center faster. Ali and Teu know this, so they need to slow down Coupang's speed as much as possible and prepare for their entry. It's like in a movie part 3.

There is a time it takes until aliens come, right? Ali and Taemu's strategy is to save that time and prepare quickly to respond. The strategy of Ali and Taemu is to prepare for a rapid response before the U.S. attacks, following the rapid development of China. They are showing a strategy to fight against Coupang. Coupang is an American company, so the reason Coupang can be so confident is that it is a company that creates jobs domestically. It rose very quickly. There are 84,000 employees in Coupang. In 2019, there were 16,000, and now it has increased to 70,000. It is now almost the same as Lotte Group. In just one year, 32,000 jobs have been created. In terms of speed, it seems like they will reach third place within a few years. So, after Samsung and Hyundai, it will be Coupang.

So, the country can't really do much against Coupang. Especially, Coupang has a significant effect on creating jobs for young people. For instance, university students used to work part-time at convenience stores or cafes, but due to unmanned payment kiosks, there are no more part-time job opportunities. With the lack of part-time jobs, the youth unemployment rate inevitably increases. Nowadays, big companies are not hiring much. In this situation, when Coupang increases its workforce by 32,000 jobs in just one year, how great is that? Especially these days, many university students work at Coupang instead of other part-time jobs. They work there all through the vacation, earn some money, and use it for their expenses. So, while the country is struggling to increase youth employment by using subsidies, Coupang is providing many job opportunities for young people like this.

Lowering the unemployment rate significantly, the country has no choice but to be thankful in this situation. Suddenly imposing a fine, Coupang had to act like this from their perspective. Just by watching the news, it may seem like Coupang is threatening the country, but we need to consider the background. Employees who seek quick promotions receive a lot of jealousy from their colleagues and seniors. Coupang is exactly in this situation. By rapidly expanding the domestic market, they are disturbing their competitors. When it's time to act, they pressure their trading partners. This incident led to the suspension of supplies from CJ, CJ CheilJedang, LG Household & Health Care, and even caused a disruption in the domestic ecosystem. Now, only Netflix and Tving are left, and recently, they have been competing with Baedal Minjok over market share with free delivery. In the past, G Market and Auction, which were doing well, were also affected by Coupang.

It was a big blow. Lotte, which used to be a distribution powerhouse, is now losing to Shinsegae and Coupang. Even offline markets are not growing properly, and by establishing their own delivery system, they are showing a more monopolistic and losing appearance than the original delivery. At this time, foreign forces appear. Distribution giants Ali and Tmall from China come over with huge subsidies, making it difficult for Coupang to compete. Not missing this opportunity, domestic competitors are forming an alliance with Ali and Tmall. For example, CJ CheilJedang, which doesn't put products on Coupang, does put them on Ali. The purpose is to defeat Coupang, as they are not fond of Coupang. Allying with Ali and Tmall, both American companies, doesn't necessarily benefit domestic companies regardless of who wins. However, Coupang's employment effect is.

Because it's so big, I thought the country would side with Coupang, but this time it's not like that. Usually, when a fight breaks out, it's not about the incidents on the surface, but rather about misunderstandings among the actors or other factors that lead to the current conflict. So, I wonder if there are reasons for Coupang's backlash. Also, I thought that Coupang might be able to push back so strongly because this could be the last chance. Looking at the app download rankings in the first half of this year, Taeu dominated almost the top spot in all age groups, with TikTok at 2nd place and AliExpress at 3rd. It seems like Taeu's products are better than AliExpress. Taeu's ranking is very high. Coupang is not in the top rankings right now. They need to quickly increase new customers, but if this trend continues, AliExpress might encroach on Coupang's territory.

As you can see, the current distribution market is like a fight where either I die or you die, one of us has to die. In this war, distribution companies cannot afford to be cautious. First of all, because I need to survive, I have to survive. After surviving, I need to pay attention to the brand or image later. Otherwise, I could die. So, I have to form alliances, betray, establish relationships with countries, devise strategies, just like a story that unfolds internationally. Therefore, one can say that the situation unfolding in the distribution market is like an international story. Therefore, regarding this incident, instead of taking sides, we should not just look at the surface of the incident, but rather watch the news that will come out later and make a more objective judgment. I think we need to do that. I will bring you more good information next time. Please subscribe, like, and turn on notifications. Thank you.

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전인구경제연구소

4 Trillion Won Fine and Impact on Logistics Center Expansion

4 trillion won for search ranking manipulation and plans to appeal the decision.

The company's resistance to the fine may lead to the shutdown of Rocket Delivery and the postponement of logistics center construction, which could impact its fast delivery service.

The expansion of Coupang's logistics centers not only supports its delivery services but also plays a significant role in creating employment and boosting the construction industry in South Korea.

Coupang's Expansion and the Challenge of Building Logistics Centers

Coupang is rapidly expanding its logistics centers and workforce, which is expected to reduce the country's unemployment rate.

The company is facing challenges as the country is trying to impose fines, but it is determined to continue building the logistics centers to improve its delivery capabilities.

The need to expand the centers quickly is driven by the growing population and the threat of attacks, as Coupang aims to establish nationwide delivery coverage.

Coupang's Rapid Job Growth and Its Impact

Coupang has rapidly expanded its workforce, creating 32,000 jobs in just one year, significantly impacting the job market in South Korea.

The company's quick growth is expected to propel it to third place in the country, following Samsung and Hyundai.

Coupang's ability to provide a large number of job opportunities, especially for young people, has a noticeable effect on reducing youth unemployment and changing the traditional part-time job landscape.

Coupang's Impact on the Domestic Market and Competitors

Coupang's rapid expansion and aggressive tactics have led to supply suspensions from major partners, disrupting the domestic ecosystem.

The company's growth has also affected competitors like Lotte, G Market, and Auction, causing them to lose market share.

The entrance of foreign competitors like Ali and Tmall, with the support of domestic allies, has intensified the competition for Coupang.

Coupang's Backlash and the Complexities of the Distribution Market

Coupang is facing backlash, possibly due to Taeu's dominance in the app download rankings and the threat of AliExpress.

The distribution market is a fierce battleground where companies must fight to survive and form strategic alliances.

The situation is complex and requires a deeper understanding beyond the surface incidents.