3 Major Social Commerce Companies in Korea on Different Paths

In 2010, Coupang, WeMakePrice, and Tmon drew attention as a trio of newly launched social commerce companies. During the past 12 years, they have taken widely different paths.

The trio's business performances last year differed significantly. While Coupang enjoyed the benefits of a non-face-to-face consumption culture amid the COVID-19 pandemic, WeMakePrice and Tmon recorded poor business results.

Coupang’s sales in 2021 hit US$18.46 billion (about 22.22 trillion won), up 54 percent from the same period of 2020. This is a 60-fold increase compared to 2014, when Coupang switched from a social commerce company to an open market based on its “rocket-speed” delivery services. Some experts expect Coupang to turn a profit in 2024.

Global investment bank Credit Suisse forecasts that Coupang’s market share will increase from 16 percent in 2020 to 26 percent in 2023. It forecast that the company will be able to decrease its loss every year and turn a profit in 2024. Morgan Stanley also predicted that Coupang’s market share would exceed 30 percent in 2023 and the company will become profitable in 2024.

In fact, Coupang posted an improved performance report in the first quarter of 2022. Its sales in the first quarter stood at US$5.116.68 billion (about 6.52 trillion won), breaking the previous high of US$5.076.69 million recorded in the fourth quarter of 2021. This is a 32 percent increase compared to the first quarter of last year on a fixed exchange rate basis. Its operating loss in the first quarter amounted to US$29.29 million (about 266.7 billion won), down 29 percent from US$295.03 million in the same period of 2021.

While Coupang succeeded in expanding its size through rocket-speed delivery services and grew into an e-commerce giant, WeMakePrice and Tmon failed to boost their competitiveness and their gap with Coupang widened every year. WeMakePrice’s operating loss hit 33.8 billion won last year. Although it succeeded in reducing losses for two consecutive years, it extended its losing streak to 11 consecutive years. Its size also decreased. Its sales reached 244.8 billion won, down 35.5 percent from the previous year.

It goes nearly the same for Tmon. Tmon’s sales in 2021 stood at 129 billion won, down 14.7 percent from 2020. Its operating loss rose 20.4 percent to 76 billion won. KKR and Anchor Equity Partners acquired Tmon in 2015 for about 400 billion won, but the company has since remained in the red. At the end of last year, Tmon’s accumulated loss amounted to 1,098.1 billion won. There is no magic bullet to solve this problem right away, and it will be difficult to normalize Tmon’s capital even if Tmon receive funds through investment, industry analysts say.