“Our growth story is reaching out to the world beyond Korea.”
Bom Kim, chair of Coupang Inc., said this on the conference call discussing last year's performance on the 26th (Korean time). He explained that the rapid growth of previously acquired Farfetch and the Taiwan rocket delivery and direct purchasing business made it possible to surpass last year's annual sales of 40 trillion won, just 14 years after starting with a capital of 3 billion won in 2010.
Last year, Coupang's revenue was 41.29 trillion won ($30.268 billion), a 29% increase compared to the previous year. It changed the leading digit just one year after surpassing 30 trillion won in 2023.
This surpassed the sales of the two giants of the domestic retail industry, Lotte Shopping (13.9866 trillion won) and Shinsegae Group (35.5913 trillion won), which operates department stores, among others, positioning it at the forefront of the retail industry beyond e-commerce.
Last year, Coupang's operating profit was 602.3 billion won ($436 million), a decrease of 2.4% from the previous year. While maintaining profitability for the second consecutive year after recording its first annual surplus in 2023, the scale of profit decreased. Despite an increase in operating profit and net profit in the fourth quarter due to fire insurance payouts, penalty surcharges from the Fair Trade Commission (162.8 billion won, 2nd quarter) and losses from Farfetch impacted the annual profit.
Notably, the luxury platform Farfetch and the Taiwan business acquired early last year showed results in terms of revenue and profit. The revenue from growth businesses, including Taiwan and Farfetch, increased more than fourfold to 4.8808 trillion won ($3.569 billion), driving overall annual revenue. Farfetch recorded its first adjusted EBITDA profit of 41.8 billion won ($30 million) in the fourth quarter last year. At the time of acquisition, Farfetch was in a state of bankruptcy with a deficit of 1 trillion won.
Chair Kim noted, “At Coupang, everything starts and ends with the customer. We work from the customer's perspective, dreaming of a world where customers can enjoy the best experience at the lowest prices. Only by harmoniously providing these two can we deliver a true 'wow' experience.” He continued by citing the examples of Farfetch and Taiwan, stating, “I believe we can successfully apply the playbook created in Korea to other markets.”
◇Early morning and same-day delivery expanded by 45%... automated logistics infrastructure ratio doubled
On that day, Chair Kim stated that “the mission to continuously change customers' lives based on innovation and operational excellence was valid last year,” and he introduced examples that enhanced customer experience, including the expansion of morning and same-day deliveries, diversification of product categories, and the launch of morning delivery in Jeju.
As a result of improving fulfillment and logistics processes, Coupang increased same-day or early morning deliveries by about 45% in the fourth quarter last year. It also expanded the range of next-day rocket delivery to include thousands of items such as large appliances, furniture, and car tires, and also increased the range of fresh food for early morning delivery by over 30%.
Additionally, in the process of upgrading logistics processes, it eliminated waste in the process and improved linehaul expenses by 16%. Chair Kim stated, “The key driving force behind efficiency improvements is robotics and automation,” and “substantial investments were made to streamline operations, doubling the ratio of automated fulfillment and logistics infrastructure last year, which also improved employee convenience and productivity.”
While doing so, Chair Kim noted, “We are just beginning to utilize the tremendous potential of automation, and the ratio of highly automated infrastructure in our overall infrastructure is merely in the low 10% range. There is still a long runway for further improvements,” hinting at future investment plans.
He said, “From robotics to artificial intelligence (AI) that performs billions of predictions daily will be the next wave of innovation and drive higher levels of growth and revenue in the coming years,” adding, “To build continuous value for customers and shareholders, I will make bold decisions with a long-term perspective and spare no effort in systematic investments.”
◇Farfetch reaches breakeven point within a year of acquisition… Wow membership launched in Taiwan
The revenue of the growth businesses, including the Taiwan operation and Farfetch, increased more than fourfold compared to the previous year. Coupang launched rocket delivery in Taiwan in 2022 and acquired the global luxury platform Farfetch last year.
The net revenue of the Taiwan rocket delivery in the fourth quarter last year increased by 23% compared to the previous quarter. Recently, the Wow membership program was also launched. Farfetch posted an adjusted EBITDA profit of 41.8 billion won ($30 million) for the first time in the fourth quarter after its acquisition.
Farfetch's adjusted EBITDA losses decreased from 41.1 billion won in the first quarter and 42.4 billion won in the second quarter to 2.7 billion won in the third quarter. Currently, Farfetch attracts around 49 million visitors monthly from over 190 countries worldwide.
Chair Kim noted, “A year ago, Farfetch recorded losses exceeding $100 million (about 140 billion won) per quarter, but now it has achieved a crucial turnaround at breakeven levels,” stating, “We applied persistent and systematic execution after acquiring Farfetch and streamlined operations. Expectations are high for the potential to bring innovative changes to the global luxury commerce customer experience.”
◇“This year, we will prioritize customers, innovate, and continue to invest in major opportunities”
Last year, the number of active customers in Coupang’s product commerce increased by 10% compared to the same period the previous year. Although the annual membership fee was raised from 4,990 won to 7,890 won last August, the number of membership members continued to grow. Increased expenditures were observed across all customer cohorts. Each cohort's annual expenditure increased by over 20% annually.
Regarding the business strategy for this year, Chair Kim stated, “We will continue to invest in major opportunities with a customer-first approach, innovation, and controlled operational methods.” He also mentioned that controlled capital allocation and operational methods would be maintained in the pursuit of new opportunities.
Chair Kim remarked, “While there are strong initiatives, I will carefully prioritize initiatives that meet high standards for their impact on customers and long-term revenue,” adding, “Having proven that we can expand new businesses in a way that complements existing business and shared assets, I will apply the same control methods to new projects and regional expansion.”
Coupang predicts that it will continue to see revenue growth of around 20% this year. Gaurav Anand, chief financial officer (CFO) of Coupang Inc., stated, “The first quarter of this year is also expected to grow by about 20% (based on won)” and estimated an adjusted EBITDA loss of around $650 million to $750 million (about 1 trillion won) for growth businesses this year. Last year, Coupang Inc.'s growth businesses recorded an annual adjusted EBITDA loss of 860.6 billion won (about $631 million).