Coupang Chairman Kim Beom-seok "The slump in the third quarter is a temporary headwind... WoW members are the best ever" (comprehensive)

Coupang Inc Chairman Kim Beom-seok said that the poor performance in the third quarter was due to a temporary cost burden, and maintained the existing forecast that the margins of the product commerce division will be close to the pre-accident level next year.

In a conference call held after the third quarter performance announcement on the 3rd (local time), Chairman Kim cited factors affecting product commerce margins as supply chain disruptions, fixed cost burden due to delayed demand recovery, and increased marketing costs to bring back lost customers.

“None of these items are structural issues,” he said. “Some are short-term investments chosen by the company, while others are temporary headwinds.”

Chairman Kim predicted that when supply recovers, supply chain disruptions will normalize, volume-based cost reduction effects, and logistics facility operation rates will improve. He added that marketing costs have already begun to decrease.

Coupang Inc's sales in the third quarter of this year were KRW 14.2209 trillion, an 11% increase compared to the same period last year, but it recorded an operating loss of KRW 642.3 billion, recording a deficit for three consecutive quarters since the personal information leak incident at the end of last year.

The cumulative operating loss in the first to third quarters of this year is KRW 1.8318 trillion, which is close to the combined operating profit (KRW 1.8987 trillion) for the three years from 2023 to 2025, when Coupang Inc recorded an annual surplus.

Chairman Kim said that the increase in sales exceeded the guidance and said, “Despite the unfavorable timing of the Chuseok holiday this year, the growth was further expanded compared to the second quarter.”

At the same time, WoW membership showed solid growth compared to the same period last year and the previous quarter, reaching an all-time high, and the net increase exceeded past levels thanks to the return of existing members and the strong influx of new members.

He expressed confidence, saying, "Members who did not churn are also showing a record level of spending and are increasing purchases at the same rapid rate as before the incident," but pointed out that the disappointing part was the remaining influence of a small group of customers who left after the personal information incident and have not yet returned.

Although the inflow of new members is enough to fill the gap, the impact of personal information incidents still remains because it takes time for spending levels to rise due to the nature of new members.

Chairman Kim announced that in the long term, he will increase the level of customer service through process improvement and automation of the logistics network while lowering service costs.

This quarter, they began work to reduce manual scanning by introducing an artificial intelligence (AI) camera to the packaging workstation, and also introduced that they reduced both work time and waste of packaging materials by linking with Autobagger, which automatically adjusts the optimal packaging size for each order and performs customized packaging.