Following the news that South Korea’s leading e-commerce company Coupang reported profit for the first time since its IPO debut in 2021;

Murthy Grandhi, Analyst at GlobalData, a leading data and analytics company, offers his views: 

“Even as the funding crunch is plaguing the tech and e-commerce startups in an high interest rate environment, SoftBank Group backed e-commerce firm Coupang has reported an operating income of $77.4 billion for Q3 2022 compared to an operating loss of $315.1 billion for the corresponding quarter of FY2021. This positive performance was due to the continued growth in active customers and total net revenue per active customer, owing to enhanced product selection of its owned inventory, customer engagement across more product categories, and increased merchants’ enrollment on its marketplace.

“Coupang was able to lower its cost to sales ratio from 83.76% to 75.81% because of distribution channel optimization and a greater proportion of revenue generation from higher margin revenue categories. The retailer’s gross profit margin was 24.19% as compared to 16.24%, representing an increase of nearly 800 bps.

“GlobalData forecasts the South Korean e-commerce market to exceed $167.7 billion in 2026. The e-commerce company is well-positioned to capture a significant market share with increased investments in technologies such as machine learning, process innovation, infrastructure, and distribution channel optimization. Coupang’s promise of constantly low prices and prompt delivery coupled with the approaching holiday season could help it maintain profitability even in the ensuing quarters.”