[Coupang's AI Dominance]① "Uncannily Accurate Recommendations"... The Secret Is Big Data

AI-Based Product Recommendations... Targeting Repeat Purchases

15 Years of Data Accumulation Enables Precise Recommendations

Longer App Engagement Time... Further Expanding Market Dominance

'Shopping Queen' (nickname, 44), a working mom living in Yongin, Gyeonggi Province, calls herself a Coupang addict. She purchases almost everything except fresh food and groceries from Coupang. Recently, she has also started ordering food through Coupang's delivery application. On weekends, she watches drama series and movies on Coupang's video streaming (OTT) platform, Coupang Play.

On June 9, Asia Economy analyzed 'Shopping Queen's' usage history for Coupang's three major apps (Coupang, Coupang Eats, Coupang Play) over the past month. The number of shopping transactions made through Coupang reached 39, with a total payment amount of 661,758 won. From April 15 to 19, she placed orders every day, and continued shopping every other day after that.

The purchased items ranged from high-elasticity pantyhose to mobile phone accessories and children's sneakers. The cheapest item was a powder pact puff (4,750 won) ordered on May 14, while the most expensive was organic cold-pressed Jeju carrot juice (43,200 won). Most other items were priced between 10,000 and 20,000 won. This reveals a consumer preference for 'value for money' over high-end brands.

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Coupang also recommends products through an AI algorithm that reflects consumer preferences based on purchase history. This led to additional purchases. On May 1, after using a 'bamboo golf tee' for the first time at a golf course and liking it, Shopping Queen immediately opened the Coupang app, searched for it, and placed an order. Later that day, a pop-up ad for a Boston bag priced in the 20,000 won range appeared, which she also purchased.

On May 9, she ordered a children's sweatshirt along with children's pants, prompted by a product recommendation that appeared just before checkout. Shopping Queen said, "I could just buy what I need and finish, but when I click, similar products show up, and later, even cheaper options appear, so I can't help but click. The number of items I purchase has increased compared to before."

AI is also used when canceling or returning products ordered from Coupang. On April 23, Shopping Queen purchased Holberry organic lemon juice (12,320 won) after it appeared as a recommended product, but changed her mind and canceled it with a single click. On May 5, after receiving a stretching yoga band she was not satisfied with, she contacted customer service and requested a return. Since 2023, Coupang has been the first in the industry to introduce a 24-hour customer service channel using AI for agent connection and a one-click inquiry system, allowing returns, exchanges, refunds, and agent connections all to be handled through the Coupang app.

Her monthly Coupang Eats usage was not high. However, on May 5 and the following day, she ordered drinks like iced Americano from Starbucks via Coupang Eats, and mainly ordered snacks such as dumplings and naengmyeon from School Food and a naengmyeon specialty restaurant. The total payment was 103,800 won. On Coupang Play, she watched Coupang's original series such as Newtopia, Family Planning, and Anna, as well as movies from the 2000s like Ripley, Sex and the City, and Ghost. Including the Coupang Wow Membership (7,890 won), Shopping Queen spent a total of 741,328 won on Coupang in one month.

Coupang has emerged as the most notable company in the age of artificial intelligence (AI). Coupang has grown into Korea's number one e-commerce platform through AI-driven Rocket Delivery and logistics innovation. In addition, by analyzing 15 years of accumulated consumer data?such as purchase history, search patterns, and product reviews?using AI algorithms, Coupang delivers personalized product recommendations, deeply embedding itself into individuals' daily lives. By also capturing personal dietary habits and content preferences, Coupang has secured the most commercially valuable data, gaining the upper hand in the AI power struggle in which global tech companies are fiercely competing.

Consumers encounter dozens of recommended products every time they access the Coupang app. Information on discounted products previously purchased or considered?such as fresh foods, beauty, and household goods?as well as products similar to past search terms, are automatically displayed with images. Related information is also frequently sent via text messages, emails, and mobile notifications registered in customer information. This is Coupang's strategy to encourage platform revisits, repeat purchases, and foster loyal customers.

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Based on users' activity, Coupang can infer not only the products consumers wear, eat, drink, and use frequently, but also their consumption tendencies, interests, purchasing power, and family composition. An industry insider said, "Aside from mobile carriers, which have most of the nation as subscribers, there are very few companies that have amassed as much customer data as Coupang."

Such features are made possible by the massive big data generated by more than 33 million monthly active users (MAU) on Coupang. According to consumer data analytics firm WiseApp Retail, as of last month, Coupang's MAU stood at 33,390,000, ranking first among general mall apps. As of the first of last month, Coupang also led in daily active users (DAU) with 14,922,696.

The number of customers who have made at least one purchase on Coupang was 23.4 million in the first quarter of this year, up 9% from 21.5 million in the same period last year. As of 2023, the number of Coupang app installations reached 32.46 million, and paid membership subscribers totaled 14 million. Considering that some users share one account per family, it can be said that nearly the entire population uses Coupang's services.

Coupang's AI recommendations, based on this vast trove of data, contribute to higher accuracy rates. As the accuracy of recommendations tailored to users' tastes and behavior patterns increases, consumers are spending more time on the app. Since last year, Coupang's app engagement time has shown an upward trend.

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According to mobile index data from data platform company IGAWorks, Coupang's average usage time per person (engagement time) peaked at 137 minutes in March 2021, when COVID-19 was rampant. This was due to a surge in e-commerce platform usage as offline activities were restricted. The average app usage time per person is calculated by dividing the total app usage time for the month by the number of monthly active users (MAU).

However, after the transition to endemic status in 2022, as consumption dispersed to offline stores, Coupang's average usage time dropped sharply to around 98 minutes. But since 2023, it has rebounded, reaching 127 minutes as of March. This suggests that as AI-powered recommendation technology becomes more sophisticated, more consumers are spending longer periods on the app.

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Coupang's average app engagement time per person is 127.87 minutes, overwhelmingly higher than other shopping apps. This means that, on average, consumers spend about two hours per month on the Coupang app. In comparison, Chinese e-commerce platforms (C-commerce) Temu and AliExpress recorded 98.43 minutes and 74.58 minutes, respectively. SSG.com and Gmarket were at 41.35 minutes and 41.32 minutes, respectively. Naver Plus Store's average engagement time was 27.55 minutes. Naver Plus Store, a shopping platform incorporating Naver's AI technology, was first launched on March 12.