South Korea’s e-commerce giant Coupang reported an operating loss of US$1.5 billion for last year, the biggest loss to date due to the cost of fielding an industry-disrupting rapid delivery service.
The loss has grown from the US$500 million shortfall reported for 2020 as the company continues aggressive investments in distribution centers.
Dubbed South Korea’s Amazon, Coupang has been drawing new customers with its fast “Rocket Delivery” service. In the fourth quarter alone, active users jumped 21 percent on the year to 17.93 million people. Annual revenue soared 54% to US$18.4 billion.
The number of customers who pay a monthly fee of 2,900 won (US$2.40) reached 9 million at the end of 2021. Purchases per member during the fourth quarter climbed 11% year-on-year.
In March 2021, Coupang made a splashy debut on the New York Stock Exchange, but its market value has soured since then. The market capitalization at the end of the first day of trading stood at US$84 billion, but the number has been languishing around US$44.5 billion as investors grew wary of mounting losses.
“We’re still far from our full potential,” CEO Kim Bom-suk said during Wednesday’s earnings call.
Meanwhile, South Korea’s traditional retailers are struggling to defend against Coupang’s loss-making expansion drive. Lotte Shopping saw revenue decrease 4 percent last year to 15.5 trillion won (US$12.78 billion), with operating profit dropping 38 percent to 216 billion won.
Although its department stores grew sales and profit thanks to demand for high-end brands, the mainline supermarket segment stagnated.
E-mart posted large gains in profit and revenue last year. But this owes largely to turning group company Starbucks Coffee Korea into an equity-method subsidiary. E-mart’s mainstay hypermarkets logged lower profits as a fallout of Coupang’s outsized footprint.
