April 26, 2024

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[THE INVESTOR] Coupang is likely to enter the local logistics market in earnest following a recent law revision, according to industry sources on March 2.

“We cannot confirm anything specific, but it’s true that we are trying to find a way to provide better services to our customers,” a company spokesperson told The Investor.

Industry sources say that Coupang is already taking the necessary steps, having changed the name of its subsidiary Comserve to Coupang Fulfillment Service. 

Comserve is the unit that runs Coupang's logistics centers. So, the move is being interpreted as an imitation of Amazon’s third-party logistics services, Fulfillment By Amazon. 

Coupang founder Kim Bom.

On Feb. 28, Korean lawmakers passed a revision that makes it easier for electric vehicle owners to earn business license plates so they can provide wider-range logistics services.

The revision itself was originally designed to spur EV sales, according to the local Transport Ministry. Since 2004, professional delivery services were permitted only for cars with business license plates. And so far, the government has been stingy in handing out such plates, for fear of triggering excessive competition.

If Coupang can attain business license plates by utilizing EVs, the company will more or less step foot into the logistics industry to solidify its position in the local e-commerce scene.

The framework is already in place. In 2016, Coupang signed a memorandum of understanding with the government of Daegu, North Gyeongsang Province, to establish a delivery system using EVs. The firm is planning to replace its current delivery trucks with 1-ton EVs that will be newly developed by a consortium of carmaker Renault Samsung and a local automobile component producer Daedong.

Industry watchers say Coupang’s splash into the logistics business would help comfort its investors who have been expressing mounting concerns over its accumulating losses. 

Coupang’s combined operating loss from 2014 to 2016 reached over 1.2 trillion won and its operating loss last year stood at around 500 billion won. The company’s losses are mainly due to investments for expanding its logistics centers since 2015 and its limits on Rocket Delivery Service, which can delivery only products that are sold directly by Coupang.

Over the past few years, Coupang secured investments worth around US$1.6 billion from investors including Sequoia Capital and Black Rock and Softbank. Most recently, the company also received a fresh 300 billion won (US$267.26 million) loan from Goldman Sachs. With the funds, Coupang established its signature Rocket Delivery Service, which promises delivery within 24 hours.

By Song Seung-hyun (ssh@heraldcorp.com)