Coupang Inc., South Korea‘s leading e-commerce platform, faced a challenging first quarter in 2024, when it saw a significant drop in operating profit as well as its first negative net profit in seven quarters.

The e-commerce giant announced on Wednesday that its first-quarter sales surged by 28 percent to 9.45 trillion won ($71.4 billion), surpassing 9 trillion won for the first time in its quarterly performance history. However, profitability took a hit as it reported a net loss of 31.8 billion won, ending a streak of six consecutive quarters of profits. Operating profit also plummeted by 61 percent year-on-year to 53.1 billion won.

Coupang’s deteriorating performance was primarily attributed to increased costs, particularly in improving customer benefits as Chinese e-commerce platforms such as Alibaba Group’s AliExpress and PDD Holdings‘ Temu’s aggressively expand in the market. The company’s $500 million investment to acquire U.S. luxury fashion platform Farfetch in December 2023 also contributed to a loss of 150.1 billion won.

In response to the rise of Chinese e-commerce, the company announced plans including an additional 3 trillion won investment in logistics to support free shipping, increasing the proportion of Korean-made products to 70 percent of its offerings, and improving membership benefits.

Coupang Chairman Kim Beom-seok, also known as Bom Kim, addressed the company‘s strategy in a post-earnings conference call, acknowledging the low barrier to entry for Chinese e-commerce companies and consumers’ tendency to explore alternative shopping options. Kim outlined plans to expand product options and customer investment, including a plan to “increase investment in Korean-made products to 22 trillion won this year from 17 trillion won in 2023.”



Coupang is also committed to expanding its investment in logistics, with plans to invest more than 3 trillion won over three years until 2026 to operate eight new logistics centers. The company also aims to expand overnight delivery coverage to 50 million people nationwide by 2027 and increase membership benefits such as free delivery and returns, with a 40 percent boost in customer benefits this year to 5.5 trillion won from 4 trillion won in 2023.

Jung Yeon-sung, a professor at Dankook University, emphasized the need for Coupang to increase its investment “to survive,” saying that if AliExpress and Temu continue to grow at their current pace, their sales in Korea could total 8 trillion won, up from 2023’s figure of nearly 3 trillion won.

By Choi Jae-won and Chang Iou-chung

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