SEOUL, May 08 (AJU PRESS) - Korea's e-commerce giant, Coupang, turned to a net loss in the first quarter in the face of growing competition from Chinese rivals, namely Aliexpress and Temu, the company announced Wednesday.
Coupang reported a net loss of $24 million (31.9 billion won) for the first three months of 2024, snapping its six-quarter run of profitability. Sales increased 28 percent year-on-year to $7.11 billion. But operating profit plummeted 61 percent to $40 million from the same period last year.
The company and analysts attributed the downturn largely to challenges from Chinese e-commerce platforms that are rolling out aggressive marketing promotions to attract savvy Korean customers.
"The entry of new Chinese e-commerce companies into the Korean market is a reminder of the industry's low barriers to entry and how consumers can switch to other shopping options faster than any other industry with a single click,” Kim Bom-suk, CEO and founder of Korea’s largest online retailer, said during an earnings conference call.
“We must repeatedly capture the hearts of our customers with the best products, prices and services as customers make new choices with each purchase."
Kim pledged the company would continue to invest in logistics to improve delivery services. Coupang announced in March that it will invest 3 trillion won over the next three years to expand its instant "Rocket Delivery" network nationwide.
Rocket Delivery is one of Coupang's key services that helped the e-commerce giant rapidly expand its customer base during the COVID-19 pandemic. As the coronavirus kept people grounded, they turned to Coupang's instant and overnight grocery delivery services instead of visiting crowded shopping malls and mega stores.
In April, the company raised its monthly membership subscription fee by 58 percent. The company also made efforts to diversify its services by operating video streaming service Coupang Play and food delivery service Coupang Eats and broadened its user base.
Copyright ⓒ Aju Press All rights reserved.