By Park Si-soo
Social commerce website Coupang suffered a massive operating loss of 121.5 billion won ($110. 69 million) last year, nearly 28 times more than its 42 billion won operating loss in 2013, the company said in an audit report Tuesday.
Its sales last year were 348. 5 billion won, up from 146.4 billion won in 2013.
Coupang said the steep hike in operating loss was caused by its lavish investment on its ambitious “rocket speed,” door-to-door delivery service.
The company spent nearly 150 billion won last year alone building a warehouse in Incheon, buying nearly 1,000 delivery trucks and hiring delivery men. It will remain aggressive on the project in the coming years, believing that quick delivery service will help boost its competitiveness amid fiercer competition with other online retailers.
Coupang plans to build more warehouses to establish a nationwide quick delivery system
The company secured $400 million in funding last year, including $300 million led by BlackRock, an American private equity fund.
“We have made an aggressive investment to have a high return in the future,” Coupang said in the audit report. “Considering the sales hike last year, the company is moving the right direction. Also we don’t think the increased loss poses a fundamental threat to our financial health.”
In March, Coupang CEO Kim Bom told reporters the quick delivery service will differentiate the company from its rival companies, such as WeMakePrice and Ticket Monster
“Coupang Man (the nickname of the company’s delivery men) is our valuable asset that will differentiate our services from rivals,” the CEO said. “Hiring more than 5,000 people for logistics may seem risky for now, but the investment will create innovation in the longer term”
Meanwhile, Coupang faces the risk that the quick delivery service could be crippled because the government recently found it to be partially illegal.
A Coupang spokeswoman said the company will keep the service available by correcting elements that are against the law.
SOURCE: The Korea Times