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Coupang Plans to Continue to Make Aggressive Investments in 2019
Cumulative Losses Amount to 3 Tril. Won
Coupang Plans to Continue to Make Aggressive Investments in 2019
  • By Choi Moon-hee
  • April 16, 2019, 10:18
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Coupang's operating loss exceeded 1 trillion won (US$882.22 million) last year, which boosted the e-commerce company’s cumulative losses over the last five years to 3 trillion won (US$2.65 billion).

Coupang presented a surprising scorecard once again. The company saw its sales surpass 4 trillion won (US$3.53 billion), widening the gap with its competitors. However, its annual operating loss exceeded 1 trillion won (US$882.22 million), which boosted the e-commerce company’s cumulative loss over the last five years to 3 trillion won (US$2.65 billion).

Coupang said in an external audit report on April 15 that it posted 4.42 trillion won (US$3.90 billion) in sales last year, up 65 percent from a year earlier. It is the largest amount of sales in South Korea's e-commerce history. It is also four times higher than that of eBay Korea, the second largest e-commerce company in South Korea.


“Rocket delivery,” an overnight delivery service that delivers goods the following day if ordered by midnight, is the motor force of Coupang’s sales growth. The proportion of sales via the rocket delivery service reaches 90 percent. It means that nearly 4 trillion won (US$3.53 billion) of sales came from direct buying through the rocket delivery service last year. Accordingly, Coupang’s total turnover is estimated at 8 trillion won (US$7.06 billion).
 

Coupang also recorded an operating loss of 1.10 trillion won (US$967.80 million). It is the only firm that had over 1 trillion won (US$882.22 million) of operating loss in the e-commerce industry.

Coupang increased the number of its logistics centers in 12 regions across the country to 24 last year. The company employed 24,000 people directly or indirectly. Its labor costs rose by more than 50 percent from 655.50 billion won (US$578.30 million) in 2017 to 986.60 billion won (US$870.40 million) in 2018.
 

Coupang also greatly increased advertisement costs unlike its competitors which either reduced their marketing costs or maintained them at the previous year level. The company spent 154.80 billion won (US$136.57 million) on advertisements along last year, which was nearly three times higher than 53.80 billion won (US$47.46 million) a year ago.

In addition, Coupang is making a different move in future plans. The firm is focusing on “investment plans,” while WeMakePrice is seeking to reduce the size of losses and Ticket Monster has announced “2020 Surplus Plan.” It will continue to make a large-scale investment this year despite its losses last year.

Some criticize Coupang’s such move. However, Coupang CEO Kim Beom-seok hinted that the company would stick to the current direction, saying, “Coupang will continue to invest aggressively in technology and infrastructure to impress customers.”