Coupang’s Retail Dominance: A Threat to Small Businesses or a New Retail Era?

The way Koreans shop has changed beyond recognition. Coupang, once a promising e-commerce startup, has now become a retail empire, recording an astonishing ₩41.3 trillion ($30.2 billion) in revenue in 2023. Its growth, driven by the speed of Rocket Delivery, aggressive pricing, and an expanding service ecosystem, has positioned the company at the center of Korean commerce. The convenience it offers has become a necessity, embedding itself into the daily lives of millions.

Yet, this transformation has not come without consequences. In the shadows of Coupang’s triumph, small businesses are disappearing. Neighborhood shops that once flourished are now struggling to make ends meet, their shelves gathering dust as customers opt for same-day deliveries instead of stepping into a store. Traditional markets, once bustling with regulars exchanging greetings with familiar vendors, now face dwindling foot traffic. Even restaurants, once reliant on loyal local patrons, now find themselves at the mercy of rising commission fees from delivery platforms, further squeezing their already thin margins.

The convenience that Coupang has perfected has inevitably reshaped consumer behavior, but in doing so, it has tilted the playing field in a way that leaves small retailers with few options for survival. While some see this shift as the natural progression of commerce, others argue that it represents an imbalance of power—an era in which small businesses, no matter how hard they try, simply cannot compete against a corporation backed by massive logistical infrastructure, AI-driven pricing strategies, and an ever-expanding consumer base.

As Korea stands at this crossroads, the debate is no longer just about innovation versus tradition. It is about the consequences of unchecked dominance and the challenge of ensuring that progress does not come at the expense of those who built the foundation of Korean retail. If Coupang continues its trajectory, what will remain of Korea’s small businesses, and will there ever be a path toward coexistence?

The Rise of Coupang: Convenience, Speed, and Market Dominance

Korean consumers no longer wait in line, browse store aisles, or even plan ahead for their shopping needs. In a world where one-day or even same-day delivery has become the norm, traditional shopping routines are fading. At the center of this transformation is Coupang, whose relentless expansion has turned it into an indispensable part of everyday life. The company’s success is not merely a story of business growth—it represents a fundamental shift in consumer expectations.

Coupang’s rapid ascent has been powered by its ability to control nearly every aspect of the shopping experience. At the heart of its strategy is Rocket Delivery, a logistics system that allows millions of products to be shipped to customers at unprecedented speeds. What once took days, or even weeks, in Korea’s online shopping market can now be fulfilled overnight. Unlike traditional retailers, which rely on third-party delivery services, Coupang has built its own end-to-end logistics network, ensuring tight control over inventory, warehouse management, and last-mile delivery.

But speed alone is not the sole driver of Coupang’s dominance. The company has also redefined pricing strategies, using AI-driven dynamic pricing to offer competitive deals that small businesses simply cannot match. For consumers, this creates a constant incentive to return, knowing that Coupang can provide not only convenience but also the lowest possible price at any given moment. For independent retailers, however, this advantage is nearly impossible to replicate.

Beyond traditional e-commerce, Coupang has expanded aggressively into new sectors, further tightening its grip on Korean consumer spending. Coupang Eats has disrupted the food delivery industry, competing fiercely with established platforms like Baemin. Coupang Play, the company's streaming service, is rapidly growing, bundling entertainment into its ecosystem to keep customers engaged. And now, with its entry into the luxury market through Farfetch, Coupang has signaled its ambition to own every segment of retail—from everyday essentials to high-end fashion.

What was once just an online shopping platform has become an all-encompassing commercial empire, setting new standards for efficiency and consumer loyalty. But as Coupang continues to grow, it inevitably casts a long shadow over the businesses left in its wake. The same model that allows it to deliver goods in record time is the very mechanism that is pushing small retailers to the margins of the economy.

The real concern is whether Korea’s business landscape can accommodate such rapid centralization of commerce without erasing the diversity of its retail ecosystem.

The Silent Collapse of Small Businesses: Who Is Losing?

While Coupang’s success has redefined convenience, it has also left deep cracks in the foundation of Korea’s traditional retail sector. The dominance of online shopping has reshaped consumer habits so drastically that many small businesses—once the backbone of the economy—now find themselves struggling to survive.

For decades, local markets, independent stores, and small-scale retailers thrived in Korean cities and neighborhoods, providing personalized service, niche products, and a sense of community that large corporations could not replicate. Today, however, many of these businesses are either shutting down or barely holding on, as foot traffic dwindles and customers shift their spending to platforms like Coupang.

The numbers paint a grim picture. Over 91% of small businesses in Korea shut down within three years of operation, a figure that has worsened as online retail has strengthened its grip. Traditional brick-and-mortar stores, once bustling with customers, now face declining sales and rising operational costs, an unsustainable combination. Even large-scale supermarkets and department stores—once seen as disruptors of local retail—are struggling to compete with Coupang’s efficiency and price advantages.

For independent retailers, the problem is simple but insurmountable: they cannot match Coupang’s speed, pricing, or logistics. A local clothing store may carefully curate its selection, but it cannot offer the instant gratification of next-day delivery. A neighborhood electronics shop might provide hands-on service, but customers often browse in-store only to order the same product from Coupang at a lower price. Even when small businesses try to move online, they find themselves competing within Coupang’s own marketplace, where the platform’s algorithms prioritize Coupang’s own private-label products or large-scale sellers who can afford deep discounts.

The impact extends beyond retail. Restaurants and small food businesses, once central to Korea’s social fabric, now find themselves trapped in a cycle of dependency on food delivery apps like Coupang Eats and Baemin. While these platforms provide access to a larger customer base, they also impose high commission fees, eating into already thin margins. As more customers choose delivery over dining in, many restaurants face the paradox of higher order volumes but lower profitability. Some attempt to raise prices to compensate, but this only drives customers toward larger chains that can absorb costs more effectively.

The emotional toll on small business owners is equally significant. Many describe the experience of running an independent store as a daily struggle against an unwinnable tide. The connection they once had with their communities is fading, replaced by faceless transactions dictated by algorithms. Some attempt to adapt by offering specialized, experience-based shopping, but in a world where convenience trumps all, such efforts often feel like a losing battle.

The rise of Coupang is often framed as a story of progress, a reflection of how technology and logistics innovation can improve consumer experience. But progress, when unchecked, often comes at a cost. And in this case, that cost is measured in the disappearance of the very businesses that once defined Korea’s commercial identity.

The question now is not whether small businesses will survive, but how many more will disappear before we decide that something must change.

Market Evolution or Unfair Domination?

Coupang’s defenders argue that the company’s success is simply the natural evolution of commerce—a reflection of changing consumer behavior, improved efficiency, and innovation in logistics. They point to the fact that Coupang did not create the demand for faster, cheaper, and more convenient shopping—it simply perfected a system that was already shifting in that direction. In a highly digitalized country like Korea, where high-speed internet and smartphone penetration are among the highest in the world, e-commerce dominance was inevitable.

But while evolution is an organic process, Coupang’s path to dominance has been anything but passive. The company has aggressively expanded its market share using tactics that, to some, resemble those of a monopoly in the making. Through AI-driven pricing strategies, loss-leading discounts, and tight control over logistics, Coupang has created an environment where competing on equal footing is nearly impossible for smaller players.

The most pressing concern is whether the playing field remains fair. Traditional businesses must contend with rising rent, labor costs, and inventory management constraints, while Coupang benefits from a vertically integrated logistics empire that absorbs many of these costs. Independent retailers often lack the algorithmic pricing tools that Coupang uses to automatically adjust prices in real time, further widening the gap.

More alarming is the growing presence of Coupang’s private-label products, which are designed to undercut even the sellers operating within its own marketplace. Much like Amazon’s tactics in the U.S., Coupang collects vast amounts of data from third-party vendors—what sells well, at what price, and to whom—only to introduce cheaper, in-house alternatives that push these same vendors out of the competition. Sellers who rely on Coupang for exposure find themselves in a lose-lose situation, where the platform both enables and undermines their business at the same time.

The restaurant industry faces a similar dilemma with Coupang Eats. Many small restaurants now rely on delivery apps for survival, but the fees imposed by these platforms often leave them with razor-thin margins. Larger chains can absorb these costs, using marketing and promotions to drive sales, but independent restaurants struggle to keep up. For some, the choice is stark: either accept the platform’s terms and barely break even, or refuse and risk disappearing altogether.

Government regulators have started taking notice. In 2023, Korea’s Fair Trade Commission (KFTC) imposed fines on Coupang for anti-competitive behavior, citing practices that unfairly favored its own products over third-party sellers. But these measures have done little to slow the company’s expansion. Unlike traditional retail, where regulations on fair competition and consumer protection have long been in place, the e-commerce sector still operates in a regulatory gray area, allowing dominant platforms to shape the market in ways that benefit them first.

If history is any indication, unchecked corporate expansion rarely benefits everyone in the long run. The question is not whether Coupang deserves to succeed—it has built an impressive business on innovation and efficiency.

The real concern is whether the Korean economy can afford to let one company control such a vast portion of consumer spending, logistics, and retail infrastructure without safeguards in place. A market that rewards efficiency is one thing. A market that eliminates competition before it even has a chance to thrive is another.

Can Coupang and Small Businesses Coexist?

The rapid rise of Coupang has reshaped South Korea’s retail landscape, forcing traditional businesses to either adapt or disappear. While the e-commerce giant continues to expand its influence, a surprising trend has emerged—a resurgence of local specialty stores, particularly in the fresh food sector. Even as consumers increasingly turn to online platforms for convenience, small-scale grocery stores, butcher shops, and local markets are finding new ways to thrive, proving that Coupang’s dominance is not absolute.

Coupang’s growth has largely been fueled by its ability to control the logistics chain from start to finish, offering everything from household goods to electronics with next-day or even same-day delivery. The platform has become the go-to option for many consumers seeking efficiency and lower prices. Yet, despite its reach, it has struggled to fully replace fresh food markets, independent grocery stores, and specialty vendors. Fruits, vegetables, and meat remain some of the few categories where traditional shopping habits persist, as consumers continue to place a high premium on freshness and quality—something that even the fastest delivery service cannot guarantee.

This limitation is not just about the products themselves but also the shopping experience. For many Korean consumers, fresh food purchases are as much about trust as they are about convenience. When selecting meat, seafood, or produce, people prefer to examine the quality themselves, choosing based on color, texture, and smell—elements that online shopping cannot replicate. Even with Coupang’s aggressive push into fresh food delivery, many still hesitate to order perishable goods online, wary of potential quality issues and the excessive packaging waste that often accompanies cold-chain delivery. Ice packs, styrofoam boxes, and layers of plastic wrapping are not only environmentally unfriendly but also inconvenient for disposal, making regular purchases of fresh food online less appealing.

This gap in Coupang’s dominance has led to an unexpected shift: small, hyper-local food vendors are seeing renewed interest. In many Seoul neighborhoods, local butcher shops are opening next to large convenience stores, and independent vegetable sellers are thriving even in areas where large supermarkets have struggled. Consumers are increasingly drawn to these stores, where they can purchase small quantities of fresh produce without the burden of wasteful packaging. Moreover, these businesses often offer a level of customer service that large platforms cannot match, with vendors selecting the best cuts of meat or the freshest vegetables based on individual customer preferences.

This shift highlights a broader transformation in Korea’s retail landscape. While large-scale supermarkets and department stores have suffered due to the rise of e-commerce, small-scale neighborhood stores that cater to fresh food needs have begun to carve out a niche for themselves. The trend suggests that while online shopping continues to dominate, it cannot entirely replace the need for physical stores, particularly in areas where freshness and trust matter most.

For small businesses, survival in this new landscape does not mean resisting digitalization altogether. Many independent retailers are adopting a hybrid approach, using social media platforms like Instagram, Naver Smart Store, and KakaoTalk to take orders and communicate with customers. Some have even partnered with regional delivery services to offer same-day home delivery within their neighborhoods, combining the convenience of online shopping with the reliability of direct sourcing.

At the same time, government intervention could play a crucial role in ensuring that small businesses are not entirely overshadowed. Policies that lower platform fees for independent vendors, promote shared delivery infrastructure, and support small businesses in their digital transformation could help level the playing field. Without such measures, the gap between corporate giants and local retailers is likely to grow even wider.

The future of Korean retail will likely not be defined by a complete shift to e-commerce, nor by the preservation of traditional shopping as it once was. Instead, it will be shaped by the coexistence of digital efficiency and localized service, where small businesses find ways to complement online shopping rather than compete with it directly. Coupang’s continued growth is inevitable, but its limitations in fresh food retail demonstrate that the demand for physical stores remains strong in specific areas. The businesses that will survive are those that understand their strengths—whether in quality, customer service, or niche product offerings—and adapt accordingly.

In the end, the question is not whether Coupang and small businesses can coexist, but rather how they will redefine their roles in a retail ecosystem that continues to evolve. The answer will not come from resisting change but from recognizing that innovation and tradition must find a way to work together if Korea’s retail industry is to remain diverse and competitive.

A New Balance in Retail?

Coupang's meteoric rise has undoubtedly altered the face of Korea’s retail industry, pushing traditional businesses into an era of unprecedented transformation. Once a disruptor in the e-commerce space, Coupang has now become an indispensable retail behemoth, commanding a significant share of consumer spending. Its relentless focus on speed, affordability, and logistical efficiency has made online shopping the default for millions. Yet, even as it tightens its grip on various sectors, the Korean retail landscape is proving to be more resilient and complex than a simple narrative of e-commerce dominance would suggest.

The emergence of local specialty stores, particularly in the fresh food sector, highlights an important limitation in Coupang’s reach. Consumers remain reluctant to rely entirely on online platforms for perishable goods, preferring instead to visit neighborhood butcher shops, vegetable stands, and seafood markets where freshness can be personally assessed. The rise of these small businesses—despite the challenges posed by large-scale digital retail—demonstrates that trust, human interaction, and product quality still play a crucial role in consumer decision-making.

However, resilience alone is not enough. If small businesses are to truly coexist with Coupang, adaptation is key. Many independent retailers have already begun integrating digital tools into their business models, leveraging social media and local delivery networks to enhance accessibility. The government, too, has a role to play in ensuring that fair competition and economic diversity are maintained, whether by regulating marketplace platforms, lowering commission fees, or investing in shared logistics infrastructure for small retailers.

Ultimately, the future of Korea’s retail sector will not be dictated by the absolute triumph of e-commerce, nor by the preservation of traditional business as it once was. Instead, it will be defined by the ability of both digital and physical retail to evolve together, finding a balance that preserves the best of both worlds.

Coupang’s expansion is far from over, and its influence will only continue to grow. But if recent trends are any indication, small businesses are not fading into irrelevance—they are simply changing, carving out spaces where automation and scale cannot replace personal trust and expertise. The businesses that survive will be those that recognize this shift, not as a death sentence, but as an opportunity to redefine their role in an increasingly digital economy.

The question is no longer whether Coupang and small businesses can exist side by side—it is whether the industry, the government, and consumers themselves will allow a future where retail is not dominated by a single force, but shaped by many voices, big and small.