Coupang’s `rocket delivery` and creative destruction

Facebook, the world`s largest social network, continues to grow fiercely. Total market value of the world’s largest social network service has grown 291 billion U.S. dollars and will soon enter the “30-billion-dollar tech club,” or a group of IT companies whose market capitalization stands at more than 300 billion dollars. Amid thriving new business models using Facebook, new term “F commerce” has been coined, a combination of Facebook and e-commerce. Facebook is moving beyond ecommerce to expand into search and Internet banks businesses, resulting in a break-down of barriers among industries.

Joseph Schumpeter, an economist and Austria’s greatest horseman, has said that "creative destruction” is a process of incessantly destroying the old one through technology innovation and incessantly creating the new one to ultimately bring transformation, adding that it is an essential characteristic of the capitalist dynamic. This term was coined 100 years ago, and it still holds greater value in this 21st century where technology is developing at a very fast speed. With IT industry expanding, the barriers between traditional industries are breaking down. Online shopping is threatening offline retail and conflicting with existing businesses during the process.

Korea`s largest online retailer Coupang has a “rocket delivery” service, which is based on its nationwide logistics system, with internal staff themselves delivering products to customers. It has broken down the existing distribution and logistics system of retailers taking order and selling, and delivery service providers doing the door-to-door service. People have called this service a “rocket revolution.”

Coupang CEO Kim Bum-seok says he plans to invest 1.5 trillion won (1.32 billion dollars) in “rocket delivery” service to move forward delivery time two hours and hire 39,000 new employees by 2017. He’s aiming to challenge head-on against logistics firms by gaining empathy from consumers. Though legal disputes could occur, it would be undesirable for customer interests and the Korean economy if creative innovations are hampered by laws that go against the trend.

shkwon@donga.com