Coupang Inc., the South Korean e-commerce giant backed by SoftBank Group Corp., reported better-than-expected revenue growth after spending to expand and lock in customer demand during an online shopping slowdown.
Revenue rose 13% to $5.8 billion in the quarter ended March, the US-listed company said in a statement. That beat analysts’ estimates for $5.6 billion. Coupang posted a $106.8 million operating profit, while active customers grew 5% to 19 million.
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, Coupang has sustained growth thanks in part to a fast delivery service supported by a growing network of automated fulfillment centers, which helps retain customers and merchants.
“Coupang’s logistics business will help the company report profits throughout this year,” said Kim Myoungjoo, an analyst at Korea Investment & Securities. A strong platform should allow the company to gain market share to 24.4% this year and 27.2% in 2024, Kim estimates.
Coupang shares fell more than 10% in the first quarter, while the S&P 500 Index rose about 1% in the same period.
Despite tepid growth as well as fierce competition locally, Coupang has managed to report quarterly profits thanks to economies of scale through highly automated fulfillment centers. It is also expanding its delivery business model in Taiwan, though it reportedly withdrew from Japan.
Although Coupang’s delivery business - famous for its promise of dawn delivery - has stabilized and become profitable, the company is grappling with increasing costs of new businesses such as food delivery and streaming services. Coupang’s seeking to increase market share for the meals business through promotional discounts, according to Citigroup.
