The Secrets of Softbank’s Success

Mukesh ValabhjiThe previous blog post took a look at Softbank, the multimedia Japanese conglomerate, and how its profits had been affected by its acquisition of Sprint Corp. However, there are many strands to Softbank’s financial position.

By the end of the 2014 financial year, it is expected that Softbank will have generated an operating profit of 950 billion yen. This is ahead of the target of 900 billion which was set 6 months previously.

Softbank Mobile performed very strongly, acquiring more smartphone customers and Finnish gaming company Supercell boosted profits further. The original target for Softbank was 1 trillion yen, but this was downgraded to 900 million yen due to the drag caused by Sprint Corp.

The conglomerate has further plans for expansion; in June 2015 it announced that it was investing $1 billion in the Korean company Coupang which specialises in e-commerce. Coupang is broadly speaking the Amazon of Korea. Valued at $5 billion, the company now joins a few elite with valuations of over $1 billion.

Coupang has achieved great market penetration; Korea has a population of 50 million, and its apps have been downloaded 25 million times. Mobile accounts are 75% of its revenue and 85% of total traffic to the service. The company has a logistics network which it set up itself as well as customer fulfilment centres, and its own fleet of delivery drivers. At first, Coupang used third parties for deliveries but then it began to replace them with its own employees to build brand awareness and to connect better with its customers.

It has offered same-day delivery for almost two years, and has set new standards for e-commerce throughout the world. Softbank thinks globally, but for the time being it is very strongly focussed on Korea.

Mukesh Valabhji’s final post in this series looks at Softbank’s investment in another company GungHo Entertainment.