Small firms supplying Coupang Inc's private label reinvest profits into R&D as sales surge

Small domestic manufacturers partnering with CPLB, the private-label subsidiary of Coupang Inc, are ramping up research and development investment to strengthen product quality.

KGS Geumgang Co., an interior finishing materials manufacturer based in Gwangju, Gyeonggi Province, has spent more than a decade developing self-installation interior finishing products. The company developed and distributed items including a sticker-type paper wallpaper certified by the Korea Environmental Industry and Technology Institute, but struggled to break into new markets and build brand recognition. About two years ago, it began producing and supplying private-label products through CPLB, and sales started to climb.

Annual sales last year reached 1.2 billion won ($833,000), growing 20 percent above the industry average. With CPLB's stable retail network added to its competitive product lineup, the company entered a virtuous cycle of rising sales. KGS Geumgang plans to reinvest those profits into product development and expand its lineup.

Laypist, a household goods manufacturer in Jincheon, North Chungcheong Province, turned profitable last year for the first time in more than two decades since its founding — just one year after beginning its collaboration with CPLB. Monthly sales doubled from 200 million won to around 400 million won, and the factory utilization rate rose from 60 percent to 120 percent.

Laypist had been unable to develop new products due to cost pressures and market uncertainty, running deficits throughout. Drawing on Coupang Inc's sales data, the company planned a large storage box, and with sales volumes guaranteed, it was able to invest boldly in research and development.

"The Comet Living Box we launched that way has become a top-selling product, now moving several million units a month on average," said Kim Jong-jae, CEO of Laypist. The company is continuing additional investment to expand its private-label product lineup featuring new technologies to more than 30 items by year's end.

Technology-driven products account for a growing share of Coupang Inc's private-label offerings. In the detergent category, products using low-irritant and eco-friendly technologies have increased. Active research and development is also under way in cosmetics, drawing on anti-aging, moisturizing and functional ingredient technologies.

Nine out of 10 partner companies are small manufacturers. "We will continue to support manufacturers so they can shed the burden of retail distribution and focus solely on R&D and production," a Coupang Inc official said.