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| Coupang's Rocket Delivery service / Korea Times file |
By Kwak Yeon-soo
Coupang recorded its biggest-ever operating loss of 1 trillion won ($883 million) in 2018 due to heavy investment in the firm's logistics capacity, Korea's largest e-commerce site said Monday.
Regarding the huge loss, the company said it was part of the investment it was making to grow sales and it aims to maintain aggressive spending.
In 2018, Coupang heavily invested in its ultra-fast "Rocket Delivery" service, expanding the product selection to 5 million items, including products supplied directly by companies such as Apple, AmorePacific and LEGO.
This is 100 times the number of products available at large discount stores.
Given that the company has its own logistics system and employs couriers, Coupang also doubled its centers from 12 to 24 nationwide.
Meanwhile, the company posted annual sales of 4.42 trillion won, or 65 percent year-on-year growth, up from 40 percent in 2017.
However, there is a growing skepticism as to whether Coupang's aggressive investment strategy will continue to work as the company has seen its losses pile up.
This is also due to the fact that competition is getting fiercer in the domestic e-commerce market.
"Coupang was able to expand its logistics capacity thanks to raising hefty investments, including the latest $2 billion from SoftBank Corp," an industry analyst said. "However, it's hard to say that their strategy will continue to last."
The analyst said that company's move is comparable to U.S. based e-commerce giant Amazon. Amazon started to make a profit after dominating the market.
Coupang's founder and CEO Kim Bom expressed confidence in its business, stating "We have made unprecedented investments to wow our customers. In addition to Rocket Delivery, our customers can now enjoy fresh food delivered by 7 a.m. With our new Wow Delivery, items are shipped free to our customers' doorsteps within hours of their order," Kim said.
"We will continue to invest relentlessly in people, technology, and infrastructure."
Other leading e-commerce firms in Korea were mixed in sales and operating losses.
TMON posted 497 billion won in sales and 125 billion won in operating losses, up 40 percent and 7 percent, respectively, from a year ago.
Ebay Korea also showed a 3 percent increase in sales to 981 billion won but a 22 percent drop in operating profits to 48.6 billion won.
WeMakePrice saw its operating losses drop 6.4 percent to 39 billion won and its sales decrease 9 percent to 429 billion won last year.
