Coupang loses $24 million in Q1 as AliExpress, Temu expand

Coupang's office in Songpa District, southern Seoul. [NEWS1]

Coupang posted net loss for the first quarter of 2024 as its profits eroded, partially due to intensifying competition with Chinese competitors like AliExpress and Temu.

Coupang's quarterly net profit swung to a loss of $24 million in the first quarter from a profit of $90.85 million of the previous year, marking the company's first net loss since the second quarter of 2022.

Coupang will invest $2.2 billion to roll out Rocket Delivery across Korea

The New York-listed e-commerce giant's operating profit declined by 61 percent in the first quarter from last year's $40 million, marking the company's first quarterly profit downturn since the third quarter of 2022.

During a conference call on Wednesday, Coupang founder and CEO Bom Kim addressed a challenging industry landscape shaped by emerging C-commerce players. Kim pledged to inject more than $16 billion into purchasing Made-in-Korea products while also enhancing membership benefits.

Coupang's revenue for the first quarter surged by 28 percent to $7.14 billion. This is the first time that revenue includes sales figures from Farfetch, the luxury platform acquired by Coupang in January. The performance exceeded market expectations of $6.93 billion.

Kim emphasized the importance of adapting to changing consumer preferences amid the Chinese e-commerce onslaught.

“New China commerce entrants remind us that barriers to entry are low, and consumers can switch shopping options faster in retail than in almost any other industry, within seconds and with a swipe of the finger,” Kim said during Wednesday's conference call.

“Customers cast a new vote with every purchase they make and will not hesitate to spend their money at another venue they deem to be better,” Kim continued. “We have to win their vote each and every time by offering them the best selection, price and service.”

To solidify its position as Korea's leading e-commerce player, Coupang will increase its investment in the volume of Korea-made products that it purchases and sells to $16 billion from last year's $13 billion. It will also pump an additional billion into member services and discounts, bringing last year's $3 billion figure to $4 billion in 2024.

“We plan to continue investing billions of dollars in capex over the next several years to strengthen our fulfillment and logistics infrastructure,” Kim said. “We aim to increase the speed of delivery across the market and make free delivery available to even the most remote corners of Korea, including secluded islands and mountain settlements that currently do not have access to our fastest delivery options.”

Coupang had previously announced a three-year investment plan totaling more than 3 trillion won until 2026 for a nationwide implementation of its same- or next-day Rocket Delivery service for the entire Korean population of 50 million. This came shortly after its Chinese rival, Alibaba Group, vowed to invest $1.1 billion over the same period.

Coupang posted earnings per share of $0.05 for the quarter, meeting market analysts' expectations.

The company witnessed the number of active customers swell by 16 percent on year to 21.5 million. Each active customer exhibited increased spending habits, with the average expenditure per customer rising by 3 percent to $315 compared to the previous year.

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]