Podcast: Is Coupang Really The Next Amazon? (Ticker: CPNG)
Our wide ranging discussion with Speedwell Research
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What do you want investors to take away from this interview?
(Speedwell Research) A broader takeaway is that a business is limited in how many different variables it can optimize for. The fewer variables a business picks, the easier it is to optimize the business for those variables.
For Coupang, they focus on service (which includes delivery speed), selection, and price. Their entire business is structured to serve those value props. This means two things: 1) a competitor cannot serve these value props as well as Coupang because they will not have structured their entire business around them, making decisions and trade-offs solely focused on maximizing these value props. 2) Coupang is not well equipped to respond should these value props they offer no longer be preferred by consumers.
Did we miss any key points in the interview that you think investors should know about?
(Speedwell Research) Something worth keeping in mind is if consumer preferences change to something other than service, selection, and price, Coupang will likely be responding to it from a suboptimal position. For instance, Walmart trying to address one-day delivery from a national store footprint is suboptimal as their loading docks are equipped to handle full trucks and inventory is housed in the storefront.
Back to Coupang, it is hard to think of how preferences could change where someone would no longer value fast delivery, but it’s possible. We see to a relatively small extent consumers are willing to accept longer wait times for cheaper prices. Perhaps consumers in the future want more locally made goods. (More likely it’s something we can’t think of that is disruptive). Of course, if this seems far-fetched to you, then as an investor you are comfortable with the assumption that Coupang’s value prop is very likely the right one for decades to come across generations.
Where can investors follow you and find your work?
(Speedwell Research) All of our research can be found at http://Speedwellresearch.com. Speedwell is named for the ship that helped ferry passengers to the Mayflower, which is how we view our role. We want to help investors, but ultimately they must make the journey themselves.
Speedwell members get access to all of our in-depth reports and members-only updates. For free content, check out http://speedwellmemos.com where we write a business or investing memo each Friday.
We also have a podcast, The Synopsis, where we have super in-depth company episodes among other business content.