Latest / The Retail Podcast / Coupang’s Profit Surge and China’s New Retail Powerhouse: APAC Trends with Ryf Quail & Low Ngai Yuen

Transcript

Coupang’s Profit Surge and China’s New Retail Powerhouse: APAC Trends with Ryf Quail & Low Ngai Yuen · The Retail Podcast

• 0:00
  Hi, I'm Reeve Quayle and I'm the Managing Director of NRF Retails
• 0:03
  Big Show Asia Pacific and this is Five Things Friday APEC
• 0:06
  edition. OK, my first number this week is
• 0:21
  from it was with our friends in Korea.
• 0:23
  Again, it's we're going to talk a little bit about coupon.
• 0:25
  So coupon is Korea's marketplace and my goodness, they do
• 0:29
  marketplace as well in Korea. So coupon has, has been a
• 0:32
  business that's been growing and has has had a, you know,
• 0:36
  perennial losses for a long time, but they are now on a real
• 0:39
  profit streak. So coupon, just to give you an
• 0:42
  idea and scale of the business now coupon reported a record
• 0:45
  revenue of AQ 3/20/25 this year in September 9.3 billion US.
• 0:51
  Now the guts of their business is in Korea, but what is
• 0:55
  significant after as it as after perennial losses, they're really
• 0:59
  on a gross on a profit streak. So in Q1 and 2025, the EBITDA
• 1:03
  was was adjusted for to to 382 and operating now at 29.3% gross
• 1:09
  margin is which is incredible for a company which really
• 1:12
  hasn't gone delivered. I've obviously delivered growth
• 1:15
  in revenue, but hasn't divided the margin, margin improvement
• 1:18
  and has come from logistics efficiency, but also strong
• 1:21
  organic growth in the home market of Korea.
• 1:23
  The strategy that's been really powering this is it's basically
• 1:26
  has been their logistics and customer experience mate, mate,
• 1:28
  which has been, you know, they've built out an extensive
• 1:31
  fulfilment and logistics network of over 100 fulfilment centres
• 1:34
  in Korea, ensuring same day delivery or at least overnight
• 1:37
  delivery there because of this infrastructure.
• 1:40
  Now they've got a membership Ecosome and Rocket Wow, which is
• 1:43
  akin to Amazon Prime, allows them to lock in customer
• 1:46
  loyalty, increase frequency and basket size.
• 1:48
  And what that has done has seen a real growth in terms of spend
• 1:53
  per customer. So spend per customer in Korea,
• 1:55
  for example, has grown 7% per customer in the last 12 months.
• 2:00
  And then if you put that in perspective, they're also coming
• 2:03
  and entering into diversifying into new high margin categories.
• 2:06
  So we're seeing acquisitions being made.
• 2:09
  So recently they acquired a marketplace called Farfetch,
• 2:13
  which is a luxury marketplace and and obviously a luxury.
• 2:16
  We see that volume of volume is obviously low, but the margin
• 2:20
  per product is higher. So coupon is has really turned
• 2:24
  the corner and it's really a shining light marketplace is
• 2:27
  really power the way across the Asia Pacific region.
• 2:30
  But coupon is really is is a unique to Korea.
• 2:34
  It is obviously an American company, but unique to Korea and
• 2:36
  it is doing very, very well. OK.
• 2:38
  My second one, we also in North Asia, we're going to talk a
• 2:42
  little bit about Chinese expansion in retail.
• 2:45
  In previous weeks, we've talked a lot about how the tech giants
• 2:49
  have come into the region and acquired brands such as
• 2:54
  Toccopaedia tents and we've seen Lazada, Solora, a local shoppy
• 3:00
  have acquired local brands and and expanded their footprint
• 3:03
  through local brands. On the flip side, we're seeing
• 3:05
  group offline groups predominantly come in and expand
• 3:08
  their own footprint. And the one I'm going to talk
• 3:10
  about today is the KK Group. And the reason why I'm talking
• 3:12
  about KK Group, this is a I'm going to share my screen now.
• 3:15
  It's they are, they are, they are a lifestyle brand and a
• 3:20
  youth lifestyle brand. They have 3 or 4 flagship
• 3:24
  stores. So their flagship stores are the
• 3:28
  Colourists, which is a beauty and makeup trends KKV, which is
• 3:33
  a retail lifestyle collecting of 100 different categories
• 3:35
  lifestyles and an X11, which is a pop culture, toys and fun.
• 3:40
  It's really focused on the Gen Z Gen Z age group 14 to 35.
• 3:45
  This is this Kaka Group was founded in the Shenzhen region
• 3:47
  of China in 2015. And, and already, you know,
• 3:51
  this, this, it's, it's a juggernaut in its own domestic
• 3:54
  market. So within the, within China
• 3:58
  itself, the, the, the business has something like 1000 stores
• 4:03
  across 200 cities in China. It's grown rapidly.
• 4:05
  So since 2015. So by that, so if from end of
• 4:08
  2015 to end of 2024, we're looking at 1000 stores, it's
• 4:12
  incredible across those masthead brands.
• 4:13
  But now we're seeing KK Group expand into, into the region.
• 4:17
  So October in 2024 was was Thailand, later with Vietnam and
• 4:22
  now the Philippines. So in that time frame, we're
• 4:24
  seeing 3030 stores across those markets.
• 4:27
  But the company aims to have over 200 stores in the region,
• 4:33
  in the region by the end of 2025.
• 4:35
  And then they'll do that by obviously partnering with
• 4:37
  deepening localisation and product tweaks, local
• 4:40
  partnerships to adapt to these new markets.
• 4:42
  This is a, this is a obviously a phenomenon that's coming out of
• 4:45
  China, which is, which is counter to the, the digital KK.
• 4:48
  The KK group is more of a, is more of a, a lifestyle group
• 4:53
  that's offline. So it's, it's a, it's a physical
• 4:56
  store retailer, not a, not a digital LED product, which we
• 4:59
  know China's does so, so well in terms of it for a store, for a
• 5:04
  group that's so young, you're looking at it for the 1st 10
• 5:08
  months of this year. You're looking at the companies
• 5:10
  it's turned over nearly 700 million US with a, with a net
• 5:15
  profit of or probably around $30 million for the 1st 10 months of
• 5:18
  2025. This is a juggernaut and it's
• 5:21
  it's only been around for 9 or 10 years.
• 5:23
  So keep an eye out for the KK group.
• 5:26
  The flagship brands on the on the on the High Street are KK
• 5:29
  KKV, which is a lifestyle retail brand, The Colourist, which is
• 5:33
  beauty and makeup and X11, which is pop culture.
• 5:35
  Thanks again for today. I look forward to talking to you
• 5:38
  soon.