Korean e-commerce giant Coupang’s sales beat estimates after big spending pays off

SEOUL – Coupang, the South Korean e-commerce giant backed by SoftBank Group, reported better-than-expected revenue growth after spending to expand and lock in customer demand during an online shopping slowdown. 

Revenue rose 13 per cent to US$5.8 billion (S$7.7 billion) in the quarter ended March, the United States-listed company said.

That beat analysts’ estimates for US$5.6 billion. Coupang posted a US$106.8 million operating profit while active customers grew 5 per cent to 19 million.

“Our sustained focus on operational excellence allowed us to achieve this milestone even as we continue to invest hundreds of millions of dollars in capex and hundreds of millions more in developing offerings over the past year,” Mr Bom Kim, founder and chief executive officer at Coupang, said on a call with analysts.

“Because we take the long view, we don’t expect every initiative to bear fruit immediately or evenly every quarter.”

Coupang shares were little changed in late US trading after the results. They climbed about 18 per cent this year through Tuesday’s close.

The company said it is still at a single-digit share of the overall retail market that is projected to grow to US$550 billion in the next three years. Coupang is expanding faster than the market overall, Mr Kim noted, calling the opportunity ahead “staggering”.

Coupang’s core delivery business grew exponentially during the pandemic as people bought everything from eggs and masks to home appliances through apps. While e-commerce has decelerated, the company has sustained momentum thanks in part to a fast delivery service supported by a growing network of automated fulfillment centres, which helps retain customers and merchants.

Despite tepid growth and fierce competition locally, Coupang has managed to report quarterly profits thanks to economies of scale through the fulfillment centres.

Its Taiwan business is still in an early stage but the firm is seeing “signs of transformative potential”, Mr Kim said.

He confirmed the company has shuttered its operations in Japan, where returns were below expectations. 

Although Coupang’s delivery business – famous for its promise of dawn delivery – has stabilised and become profitable, the company is grappling with rising costs of new businesses such as food delivery and streaming.

In April, Coupang Eats started to roll out discounts of 5 per cent to 10 per cent on all orders in most of the areas in Seoul, with the regions of the coverage continuing to be expanded in coming months, said Mr Kim.

Citigroup said Coupang is seeking to boost market share for the meals business through the discounts.

Regarding the adoption of generative artificial intelligence (AI), Mr Kim said Coupang has been working with machine learning models across all aspects of the company’s business. 

“I think generative AI is exciting,” he added. “Like all these new technologies, we will continue to invest and look at all the tools that we can harness to deliver a better customer experience and drive operational excellence.” BLOOMBERG