Coupang, an E-Commerce company, recorded 2.5 billion dollars in sales and 598 million dollars in operating losses last year. Sales went up 40 percent from the previous year, but operating loss also increased by 13 percent.
Coupang continued to run a deficit of more than 468 million dollars each year after receiving 1 billion dollars from Son Masayoshi, the Chairman of Softbank, in 2015. The three-year cumulative deficit is worth about 1.64 billion dollars. The industry is diagnosing it as a deficit that far exceeds forecasts.
Coupang, on the other hand, says it is an extension of the “planned deficit” stemming from large-scale investments since the launch of its“rocket delivery” in 2011. An official at Coupang said, “The operating loss is not a big issue because now we are enlarging the pie through investments. Some claim that capital is being eroded by the accumulated deficit, but the current cash reserves exceed 750 million dollars.”
Coupang’s capital erosion is attributable to its rocket delivery service, which guaranteesshipment to your front door the next day if you order by noon the previous day. Coupang is the only distributor that can deliver a product by the next day.
The problem is that Coupang’s transportation and rental costs for last year rose by 13 percent to 137 million dollars from 121 million dollars.
Coupang also maintains a system that sells some products, such as diapers, at a lower price than the price the manufacturer bought during the direct purchase process to secure competitiveness.
Meanwhile, according to the Investment Bank (IB) industry, Coupang has attracted 400 million dollars in investment from BlackRock, Fidelity, and Wellington. It is a structure in which investment is flowing through the U.S. Coupang Corporation.
