Small manufacturers producing Coupang's private brand (PB) products are reinvesting their increased sales into research and development and production facilities.
According to Coupang on August 2, KGS Geumgang, a manufacturer of interior finishing materials based in Gwangju, has been supplying sticker wallpaper and insulation sheets to Coupang's PB subsidiary, CPLB, for about two years.
The company has developed self-interior products that reduce condensation and drafts for over a decade. Its sticker paper wallpaper has received environmental certification from the Korea Environmental Industry & Technology Institute for its effectiveness in reducing harmful substances and environmental pollution.
Despite having the technology, the company faced limitations in expanding its business due to a lack of capital, distribution networks, and marketing capabilities. However, securing a stable production volume through Coupang allowed it to achieve sales of 1.2 billion won last year, representing a growth rate 20% higher than the industry average.
Kim Yoon-kyung, CEO of KGS Geumgang, stated, "With a stable distribution network in place, our manufacturing operations have gained momentum. We plan to reinvest profits into product research and development to expand our product range."
Lifist, a household goods manufacturer based in Jincheon, also turned its first profit last year, just one year after collaborating with CPLB. Monthly sales increased from about 200 million won to 400 million won, and the factory's operating rate rose from 60% to 120%, according to the company.
Lifist faced significant costs in developing plastic storage products, with mold expenses ranging from tens of millions to hundreds of millions of won. Competing with low-cost Chinese products made it challenging to predict sales volumes, complicating new investment decisions.
The company used Coupang's sales data to plan domestic production of large storage products, which typically incur high overseas shipping costs. Once it secured a stable sales volume, it invested in mold development and launched the 'Comet Living Box.' The company aims to increase its PB products featuring new technologies to over 30 by the end of this year.
Kim Jong-jae, CEO of Lifist, remarked, "With sales data that allows us to predict market demand and a stable volume, we were able to expand our investments in mold development and production facilities."
Coupang is increasing its range of PB products that require technological development, including low-irritation detergents and functional cosmetics. The plan is for manufacturers to focus on production and quality improvement while CPLB handles sales and logistics, thereby reducing distribution costs for small businesses.
According to Coupang, nine out of ten partner companies are small manufacturers, which account for a significant portion of Coupang's PB product sales. As of 2024, there are 630 small manufacturers supplying PB products nationwide, a fourfold increase since 2019, with employment levels steadily rising to around 27,000.
A Coupang representative stated, "We will continue to support manufacturers in reducing distribution burdens so they can focus on research and development (R&D) and production."
* This article has been translated by AI.
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