The Korea Herald


Coupang reports first profitable year

CEO touts Rocket Delivery strategy as key growth driver

By Kim Hae-yeon

Published : Feb. 28, 2024 - 15:15

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Coupang delivery trucks line a parking lot in downtown Seoul on Feb. 15. (Yonhap) Coupang delivery trucks line a parking lot in downtown Seoul on Feb. 15. (Yonhap)

New York-listed e-commerce giant Coupang on Wednesday reported its first-ever annual operating profit of $473 million last year, marking a milestone since its inception in 2010.

It also reported $24.4 billion in sales, a notable 20 percent jump from 2022.

In the fourth quarter alone, its quarterly sales soared 20 percent to a record $6.6 billion, while its operating profit saw 51 percent on-year growth to $130 million.

"Since the beginning of this company, we have made foundational bets on 'new-competency initiatives,’” Kim Bom, founder and CEO of Coupang, said during an earnings conference call earlier in the day. “These are bold bets that required years of investment, persistence and patience before they began producing meaningful free cash flows for our business.”

Kim noted the company’s flagship "Rocket Delivery" service as a case of such an initiative that has brought the company to manage inventory, open fulfillment centers, assemble nationwide logistics fleets, and orchestrate same-day delivery via an integrated network.

"Today, small and medium enterprises who do not have access to physical shelves in traditional retail and lack the capital to build their own technology and infrastructure, account for over 80 percent of our merchant base in fulfillment centers. We’re delighted to share with these enterprising small businesses access to billions of dollars of historical investment we’ve made in our Rocket network to help them delight customers and grow their businesses," Kim said.

Meanwhile, net revenues in developing ventures such as its food delivery platform, Coupang Eats, video streaming service Coupang Play, fintech business Coupang Pay and overseas business totaled $273 million in the fourth quarter, doubling from the same period a year earlier.

The firm's free cash flow generation for 2023 totaled $1.8 billion, even after an investment of over $450 million in developing offerings.

Kim particularly elaborated on expansion plans for Taiwan as an example of an incremental investment, which is proving its potential for growth, scale and impact.

"Since launching the Rocket (service) in October 2022, Taiwan's customers and revenues have continued to compound at an incredible rate, more than doubling over the last two quarters alone. It’s a pace of adoption and growth that exceeds what we experienced in Korea over the same period of time," Kim said.

Meanwhile, Coupang had slashed its annual operating loss by 92 percent, reducing it from $1.5 billion in 2021 to $112 million in 2022, before finally turning a profit last year. The company has sustained a surplus for six consecutive quarters since achieving its first quarterly profit in the third quarter of 2022.

Coupang's active customer base, defined as customers making at least one purchase per quarter, surpassed 21 million by the end of last year, representing a 16 percent year-on-year increase. Coupang's paid Wow membership surged by 27 percent to 14 million over the past year.

“This year we provided a record $3 billion in benefits and savings to our Wow members, providing relief amidst high inflation," Kim said. "Customers are increasingly turning to the Wow membership for its unparalleled value, from exclusive discounts on retail products and Eats, to free Dawn Delivery, to unlimited Play content streaming and much more."

The company's chief financial officer, Gaurav Anand, commented that the firm is still in the early stages of its growth journey in Korea, as Coupang currently represents a very small fraction of the $560 billion in total commerce spending projected here by 2027.

“While we are pleased with the progress we made this quarter, we see even an greater opportunity in front of us, as we represent just a single-digit share of the vast retail spend in Korea, and even smaller in Taiwan,” said the CFO.

In regards to Coupang's recent acquisition of Farfetch, the luxury shopping platform in the UK, Kim said that the firm hopes to turn it into a business that transforms customer experience around luxury fashion. Kim added that they will come up with a plan to make Farfetch "self-funded," making it a worthwhile investment for shareholders.