Coupang losses deepen on logistics investment

South Korean e-commerce operator Coupang is expected to log mounting operating losses for 2015 due to hefty investments in the firm’s logistics capacity, industry sources said Thursday.

Coupang is expected to log over 400 billion won ($326.9 million) in operating losses when it files its 2015 audit report in mid-April due to rising costs in building new logistics centers and hiring new staff, according to the sources.

Coupang’s sales were estimated to have jumped more than fourfold last year from 348.5 billion won in 2014. Its new same-day delivery service helped attract more customers.

Coupang launched an ultra-fast delivery service called “Rocket Delivery” in March 2014 by establishing its own logistics system and employing couriers.  

Addressing questions about the sustainability of its business model, Coupang said last year’s deficit was an inevitable result of aggressive investment.

In November, Coupang said it would invest 1.5 trillion won in expanding logistics capacity by 2017 to step up its same-day delivery service, just months after it won a $1 billion investment from Japanese telecommunications giant SoftBank Corp.

The company said it will hire 4,000 more staff in the delivery and logistics sector by next year, in addition to 3,500 full-time delivery staff, and have 21 logistics centers across the nation.

As a result of aggressive marketing, Coupang’s market share in the local online market has steadily risen from 2.3 percent in 2013 to 5.6 percent in 2015. Mobile devices also accounted for 9.8 percent of its transactions last year, according to industry data.

(khnews@heraldcorp.com)