South Korean e-commerce giant Coupang has reportedly lost billions of dollars since it was founded. Coupang is a company born out of the South Korean Internet industry’s response to the U.S. Amazon. In order to achieve fast delivery and increase consumer options, the company built a large number of order delivery centers and logistics warehouses in Korea, burning through a lot of cash in the process.
Today, the company is approaching break-even. Some analysts predict that the company will soon post its second consecutive quarterly profit and achieve positive annual operating profit for the first time in 2023.
One day in February, Coupang unveiled a “black technology” order delivery center in the southern Korean city of Daegu. A large number of automated “short” robots (AGVs in industry parlance) converged on a parking lot. These robots, each capable of transporting 1,000 kg of goods, look like a bookcase and can move as flexibly as a floor sweeper, and inside the warehouse, they deliver goods to pickers or stockers. By relying on these robots, the labor load of warehouse workers has been reduced by two-thirds.
Coupang’s 12-story order delivery center in Daegu, which was built with a total investment of $260 million, was also recently unveiled to the public for the first time as a “nerve center” controlled entirely by artificial intelligence. In fact, Coupang, which has kept a low profile in the past, is now showing off its technological equipment in a high-profile manner, and similar robotic automation technology will reportedly be extended to the company’s other order delivery centers.
E.J. Choi, regional director for distribution operations at Coupang’s Daegu delivery center, said the company already has plans to expand robotics and automation. The Daegu Delivery Center serves as a pilot and model for improving the efficiency of warehouse operations and continuing to enhance the consumer shopping experience while reducing the labor intensity of staff.
The Daegu Delivery Center showcases a technologically splendid scene that exemplifies how artificial intelligence hardware can assist human labor.
Inside the warehouse, the aforementioned automated transport robot works in an enclosed space to prevent collisions with staff. The robot would move to a specific shelf of merchandise, remove the item, and then travel nimbly from side to side to deliver it to a staff member, who would take it out of the top of the robot’s shelf.
On another floor of the delivery center, there are a large number of stocking robots that will store merchandise appropriately according to algorithms developed by Coupang to enable the quickest removal of merchandise later. The robots are nimble and new on the white floor, looking a bit like children flying around an ice rink.
Like many start-ups, Coupang was born with the backing of some financially strong investors (such as Japan’s SoftBank Group) and was able to secure significant development funding. Today, however, the situation has changed, and many start-ups that have been slow to turn a profit have seen their stock prices plummet.
New investments are hard to come by. In the last quarter, for example, SoftBank Group’s Vision Fund saw its investment cut by as much as 95%.
Relying on investor support and financing from a public offering in 2021, Coupang has been expanding its service network within Korea. Recently, Coupang has further increased its delivery speed and expanded its service area, and the company has also made a price increase, but this has not affected the continued growth of users.
In March 2021, Coupang went public on the New York Stock Exchange at an offering price of $35 per share, and its current share price has fallen by more than half from the offering price.
Also in the past few years, the company has been hit by some controversial events. For example, a fire broke out at an order delivery center in Incheon, South Korea in 2021, and additional employees protested, demanding upgraded working conditions and increased wages. The company later pledged to secure the workplace and began offering medical and health benefits to its employees.
The founder of Coupang is Bom Kim. According to the strategy developed by Bom Kim, Coupang plans to enter the markets of China, Taiwan and Japan in the future.
In a conference call with investors last November, Bom Kim said that the company is very excited about the long-term growth opportunities in overseas markets outside of Korea and that the company’s further investment moves are a sign of confidence in future opportunities.
In Korea, Coupang has a total of 100 order delivery centers and logistics warehouses. However, to date, the company has not built an automated delivery center as advanced as Daegu in overseas markets and has not yet given detailed plans for expansion in overseas markets.
Yang Zixiao, an analyst at Blue Lotus Capital Advisors, said internationalization is a big challenge for Coupang, which means they will be competing with Internet giants like Amazon.
Yang said the global expansion is not easy, and at least for now, it is challenging. For example, in the e-commerce space, besides familiar giants like Amazon and Alibaba, there are other new players, such as Chinese cross-border e-commerce company Shein, and even short-video juggernaut TikTok, which also wants to open up e-commerce, so e-commerce is going to be a very crowded market.
Coupang, they have decided to promote automation and robotics in their order delivery centers. Daegu order delivery center is their starting point, not the endpoint.
The robotics in the warehouse is a very modular and flexible system that Coupang can easily replicate in other delivery centers, said Mr. Choi, the regional director of Coupang mentioned above.
