Coupang reports record revenue, but loss still big

Coupang’s revenue broke 4 trillion won ($3.5 billion) in 2018, a record, while operating losses crossed the trillion won line.

According to a public announcement on Monday, the company’s annual revenue in 2018 was 4.42 trillion won, a record not only for the company but also for Korea’s entire e-commerce market. The year-on-year increase was 65 percent, compared with 2017’s 40 percent increase.

As the company expands, so to have its investments. As a consequence, Coupang’s operating loss jumped to 1.09 trillion won last year from 638.8 billion won in 2017.

Over the year, the e-commerce company doubled the number of warehouses to 24 across the country.

It hired 24,000 more employees. The range of products it can send within 24 hours - a service dubbed “Rocket Delivery” - grew to five million from two million in 2017. Despite the large operating loss, Coupang has no intention of backing off of its investment spree.

“To satisfy our customers, we have conducted massive investments never seen before,” Coupang CEO Kim Bom said in a Monday statement. “We will continue to invest aggressively in technology and infrastructure until the day customers ask themselves, ‘How did we live without Coupang?’”

The direction is nothing new for the eight-year-old company, which has never been in the black and has the ambition to be Korea’s answer to Amazon. Its aggressive investments raised eyebrows for some until last November, when the company received a $2 billion investment from the SoftBank Vision Fund.

Korea’s e-commerce scene has rapidly grown over the last decade, largely boosted by sales coming via smartphones. In 2018, a total of 111 trillion won worth of goods were traded online, a 22.6 percent increase year on year. Despite the boom, few companies in the e-commerce scene are profitable. WeMakePrice and Ticket Monster, or TMON, also failed to achieve a turnaround last year.

Along with Coupang, the three all started out as “social commerce” sites, similar to Groupon. Earlier this month, TMON announced its annual revenue for 2018 rose 40 percent year on year to 497.2 billion won. Operating losses increased 7 percent to 125.4 billion won. The increase came as a result of increased investments in IT and development.

WeMakePrice experienced a sales drop but managed to reduce losses. In 2018, it generated 429.4 billion won in sales, down 9 percent. Its operating loss was 39 billion won, 6.4 percent lower than in 2017. The volume of transactions grew 28.6 percent to 5.4 trillion won in 2018.

The company reduced the number of resold products and expanded products it sells as a platform, mediating between the seller and customer. By reducing the number of resold products, it was able to decrease costs for logistics and delivery required when purchasing from sellers and reselling them to customers, the company explained.

BY SONG KYOUNG-SON [song.kyoungson@joongang.co.kr]