Coupang posts weak retail sales despite record-high quarter

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Coupang posts weak retail sales despite record-high quarter

Published: 06 Nov. 2024, 08:33 Updated: 06 Nov. 2024, 20:17

KIM JU-YEON
[email protected]

Coupang's delivery truck is parked at a parking lot in Jung District, central Seoul, in August. [NEWS1]

Coupang posted retail sales of $6.14 billion in the third quarter, failing to meet Wall Street's estimate of $6.24 billion.

Increased facility investments and losses at recently acquired subsidiary Farfetch weighed on the company's profitability.

Operating income for the quarter totaled $109 million, also falling short of market expectations, while net income fell 30 percent from the previous year to $64 million.

The company, nevertheless, reversed two consecutive quarters of net loss, reporting that revenue for the third quarter had surged 27 percent on year to an all-time high of $7.87 billion in its earnings release on Tuesday.

Coupang delivery trucks are parked at a parking lot in Seoul on Wednesday. [YONHAP]

Coupang founder and CEO Bom Kim attributed the growth to “increased spending by existing customers” on an earnings call.

Coupang's user base grew in the third quarter, with the WOW membership having retained customer engagement. WOW members ordered nine times more than frequently than nonmembers did, and mature WOW members spent more than two and a half times more time on Coupang apps than others.

The company recently hiked the price of its paid WOW membership 58 percent from to 4,990 won ($3.57) to 7,890 won. The new pricing took effect in April for new members and in August for existing members.

The membership encompasses benefits such as guaranteed next-day arrival, free Coupang Eats food delivery and complimentary access to streaming platform Coupang Play.

Local analysts further attributed Coupang's boon in sales to the effects of the liquidity crisis at competing online platforms TMON and WeMakePrice, which drove sellers to pull their services and users to leave en masse.

Coupang also highlighted its success and opportunities in the luxury business.

“Our newer offerings, like Fulfillment and Logistics by Coupang and R.Lux, a new luxury segment, demonstrate the substantial growth potential from selection expansion on Rocket Delivery,” Coupang Chief Financial Officer Gaurav Anand said in a press release.

“We also reached an important milestone this quarter, bringing Farfetch close to breakeven profitability ahead of schedule.”

A banner to celebrate the IPO of online fashion house Farfetch is displayed on the facade of the of the New York Stock Exchange (NYSE) in New York on Sept. 21, 2018. [REUTERS]

The marketplace launched beauty platform R.Lux in October and acquired Farfetch, a Britain-based luxury goods platform that had been facing financial difficulties, for $500 million last December.

Coupang said in its earnings call that it will focus on stabilizing operations for Farfetch for the rest of the year and explore synergies with Coupang next year.

It plans to invest 3 trillion won over the three years to expand its same-day Rocket Delivery service nationwide.

The family of a deceased delivery worker and a comittee for delivery workers who died on the job due to fatigue protest in front of the National Assembly building in Yeouido, western Seoul, on Sept. 9. [NEWS1]

Coupang had shifted to a net loss of 88.7 billion won from January to September of this year from a net profit of 426.4 billion won in the same period of last year.

Its acquisition of Farfetch had contributed to this loss, as well as a fine levied by the Fair Trade Commission for allegedly manipulating its search algorithms to unfairly benefit its private brand products, which the platform says are a crucial aspect of its business, as well as customer reviews.

The e-commerce platform also faces increased pressure to resolve its labor issues, particularly due to continued delivery and warehouse workers' accidents and deaths while on their jobs.

Update, Nov. 6: Details from the post-earnings call

BY KIM JU-YEON [[email protected]]