Coupang shells out in a bid to attract new employees

A Coupang delivery worker stands by one of the company's delivery trucks. [YONHAP]

Coupang has become one of the biggest employers in Korea, aiming to acquire personnel to keep up with high demand for e-commerce deliveries.

Coupang had 67,679 employees paying the national pension of as of Feb. 28, up by 10,286 people, or 18 percent compared to Feb. 17 last year according to the National Pension Service (NPS). The figure includes those working at Coupang, Coupang Fulfillment Service, Coupang Logistics Service and CPLB, a company wholly owned by Coupang that sells daily necessity items on the e-commerce website.

The increase is more than the 4,496 employees added at Samsung Electronics during the same period, up 4.2 percent. It’s also bigger than Emart — a similar e-commerce service operator with Gmarket, Auction and SSG.com — which actually lost 46 employees during the period, down 0.2 percent.

Big companies like Samsung or LG were traditionally known as the top companies to create new jobs, but that title has been handed over to Coupang.

However, the massive amount of new hires are mostly for its delivery and logistics center, which Coupang has been rapidly adding to keep up with demand during the pandemic’s e-commerce boom, rather than its offices.

While the total number of delivery workers only grew 2.2 percent on year to 1.085 million in 2020, according to the Ministry of Land, Infrastructure and Transport, 3.37 billion parcels were delivered in 2020 based on National Logistics Information Center data, surging 20.93 percent on year.

For Coupang, acquiring delivery workers is key as it invests in more fulfillment centers and expands delivery services. It announced it plans to employ 50,000 Coupang Friends — delivery workers directly employed by the company — between 2020 and 2025.

The company is already close to its goal. It employed 25,000 in 2020, and although the number employed last year hasn't been announced yet, it is also expected to be high.

Although most e-commerce and logistics companies’ delivery workers are contractors and not calculated into the total number of employees, Coupang directly employees most of its delivery and fulfillment center workers as an incentive to attract as many people as possible from a limited pool of labor. The only exception is the part-time Quick Coupang Flexers, which a spokesperson for Coupang says make up for small portion of its total delivery and logistics workers.

The company says Coupang Friends earn annual pay between 35 ($28,460) and 48 million won working 5 days a week, while contractors at other logistics companies work 6 days a week.

Coupang also tries to attract new hires by paying for part of Coupang Friend’s children’s kindergarten fees and giving every new hire a 1.5 million won signing bonus.

It also has the Coupang Care program, which allows one-month paid leave for employees who are found to have high blood pressure or blood sugar levels during regular health checks.

The company spent 4.7 trillion won on employee salaries in 2021, up 72.7 percent on year. Wholly owned subsidiary Coupang Fulfillment Service spent 1.49 trillion won last year, up 45.4 percent on year, on salaries for its employees.

While benefits are successful when it comes to attracting new hires, they don't make them stay.

Based on NPS data, 614 new employees started working at Coupang’s Anseong Fulfillment Center between Feb. 17 last year and Feb. 28 this year. However, 489 left during the same period. At the Yongin Fulfillment Center, there were 595 new employees, while 543 left.

There were also cases in which the number of employees leaving surpassed new employees. At the Mokcheon Fulfillment Center, 379 employees were added while 382 left. The Goyang Fulfillment Center had 650 new employees but 653 left.

"Delivery and fulfillment center jobs are preferred by workers who want short-term jobs instead of staying at one company to work for a long time, which is one of the reasons why [turnover is so high]," said a spokesperson for Coupang.

Although better pay and welfare for workers is a positive change, the burden on the company has increased.

“The company’s fixed costs surged after the Covid-19 pandemic due to building logistics facilities and hiring more employees,” said Park Sang-jun, an analyst at Kiwoom Securities.

Coupang has never logged a profit in the past, and its net loss in 2021 grew 232.6 percent on year to $1.54 billion.

“Delivery services are expected to report less-than-expected profits due to heightened competition to stand out among the market,” said Jeong Yong-jei, an analyst at Mirae Asset Securities. “The delivery services need to provide extra incentives to delivery workers to keep up with high demand.”

Despite the cost of providing extra incentives to attract new employees, Coupang has no plans to slow down when it comes to hiring.

It finished the construction of its Daegu Fulfillment Center in March, and announced it will hire an additional 2,500 employees to work at the center. More fulfillment centers will be built by the end of 2025 in Gwangju, Eumseong and Jecheon in North Chungcheon and Gimcheon in North Gyeongsang.

BY LEE TAE-HEE [lee.taehee2@joongang.co.kr]