How Coupang missed the Fintech opportunity

Hey!

Coupang, the “Amazon of South Korea”, controls close to 40% of the country’s e-commerce market and serves almost half the population. Even with its dominant position, Coupang continues to grow, with analysts projecting $45 billion in revenue by 2027. That made me think Coupang must have a strong Fintech arm, just like Mercado Libre with Mercado Pago or Sea with Shopee.

But I was wrong. Coupang’s Fintech business is limited to a wallet, Coupang Pay, and a co-branded credit card, WOW card. Limited disclosures suggest that these products have a marginal contribution to the company’s top line. So what happened? My conclusion is that Coupang lost the wallet war.

South Korea experienced a major shift from card payments to mobile wallets, and Coupang was late to respond. Coupang’s wallet came too late, Samsung, Naver, KakaoPay, and Toss had already built strong footholds. And in Fintech, payments come first. If you control payments, you earn the right to offer loans, insurance, and investments.

Coupang missed that chance.

Let’s dive in!

Jevgenijs
p.s. if you have feedback, just reply to this email or ping me on X/Twitter

Today’s write-up is about Coupang, the “Amazon of South Korea”. You can find my write-ups about Mercado Pago, the “Amazon of Latin America”, here, and Sea, the “Amazon of Southeast Asia”, here.

Founded in 2010 as a Groupon clone, the company pivoted into commerce around 2012-2014, and went public in 2021 at a $60 billion valuation, making it the largest U.S. IPO by a foreign company since Alibaba. As of this writing, Coupang $CPNG ( ▲ 0.93% ) has a market capitalization of around $55 billion.

Coupang’s core business is e-commerce in South Korea, but over the years it has expanded geographically into Taiwan (an earlier attempt to enter Japan was unsuccessful) and broadened its offerings to include restaurant delivery and video streaming. In 2024, it also acquired the global luxury marketplace Farfetch.

It’s worth noting that South Korea has a population of 51 million and 23 million of them use Coupang. The company is the undisputed leader in South Korean e-commerce, with nearly 40% market share, followed by Naver (often called the “Google of South Korea”) and Gmarket (the “eBay of South Korea”).

In 2024, Coupang reported total revenue of $30.3 billion, almost five times higher than the $6.3 billion it generated in 2019. Despite its already large market share, Wall Street analysts expect Coupang’s growth to continue, projecting its revenue to reach nearly $45 billion by 2027.

A key difference between Coupang and companies like Mercado Libre and Sea is that Coupang primarily sells products itself (known as “first-party” or “1P”), whereas Mercado Libre and Shopee mainly operate as marketplaces for third-party (“3P”) sellers. However, third-party sales are growing faster than first-party sales.

Coupang, like Amazon, does not disclose Gross Merchandise Volume. However, its financials show growing revenue from “third-party merchant services.” In 2024, the company generated $5.6 billion in “third-party merchant services”, including $1.7 billion contributed by Farfetch.

To put Coupang’s scale into perspective, I compared its estimated GMV with that of Mercado Libre and Sea (see chart below). Despite operating in a market of just 51 million people, Coupang generates a GMV comparable to Mercado Libre, which serves a region of over 600 million.

That got me thinking that Coupang should have a massive Fintech business. As I explained in my write-ups on Mercado Libre and Sea, e-commerce creates a strong foundation for payments, as well as consumer and merchant lending.

…and I was wrong.

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