Earnings don’t look that bad, but the stock is tanking. Revenue growth 48% YoY. Customer growth 20% YoY 16,823 (2021) vs 13,987 (2020). Gross profit growth of 62% YoY. Advertising revenue tripled YoY.
95 million losses due to investing in labor and operations. The increased losses they blame on covid and its restrictions. It somewhat contributed to it but also, they didn’t do enough at the time. Typically, Koreans hire Koreans, no foreigners unless some other reason. In seoul and the greater area, there is an abundance of legal and able to work foreigners. There were many instances of drivers from other companies paying foreigners to do their work for them at a fraction of the cost. Q3 is summer and the weather here is constantly like a sauna. Our summers is considered the rainy season, imagine delivering all day in the heat and rain. Of course, Koreans wouldn’t want to work when they can stay home and get stimulus or just outsource it for cheap while still getting paid at home. There has been an uptick in hiring of foreign drivers lately for both eats and rocket delivery according to various SEA facebook users. Another thing is the lessened supply of workers I suspect is due to less demand to work for CPNG. There has been a lot of negative news this year related to the company. A worker died from overworking right before the stocks listing, the labor ministry is looking to investigate them over worker dispute, etc. Coupang launched coupang care that gives drivers 4 weeks paid leave and other programs for personal health. So, they are attempting to fix the bad events in some way. Honestly management including Bom seems to make think they aren’t that good.
I will try explaining some of their services for people thinking of investing into the company and give some of my opinions.
Coupang Rocket delivery:
This is their original service and what helped them become popular. Rocket delivery is just super speedy delivery, like Amazon prime. They have different levels to it which in include WOW, direct, fresh, and +2. There was another tier, but I can’t seem to remember the name or find it in the app. Wow is the regular version, next day 12-7am delivery. Direct is the international program, receiving goods directly from America (might have other countries, unsure) at an affordable price and duties included. Fresh is the same as WOW but focused primarily on groceries. Though I found that they do include other items occasionally like games, household products, etc. +2 is just standard delivery that is mostly provided by outside delivery services. It can take two days or longer to deliver hence the name. But in Korea usually is a lot faster then +2 days. You need to be subscribed to wow membership. One thing I want to point out is that it’s great for reserving orders. Certain things sell out fast here such as games, electronics (GPU, pc, etc.), fruits, and expensive shit. You can reserve it on the app and when they launch it will be delivered by dawn.
Coupang Wow membership:
Wow membership is just Amazon prime but with less things included with it. Membership fee is 2900 won or about 2.50$ a month which is hella affordable. The long term idk if it can help it become profitable or not. Other competitors that provided similar ecommerce membership are priced similarly. You get free delivery, and 30 day returns with all coupang delivery options besides sellers that opt out of selling through their fulfillment. Coupang play is included (streaming service). 5% cash back when using coupang money (just their own app wallet). Access to gold box, daily sales items that can be discounted up to 75%.
Coupang Fresh:
Coupang fresh is their grocery delivery service that delivers same day or early morning (12-7am). A lot of this works together with the Rocket delivery service. They are the best at delivery and packaging compared to competitors which is important for perishables. They increased fulfillment center infrastructure by a lot stating there is increased demand. Which is good long term, but losses will be seen for a while on their financial statement. Just saw an article that one the newer competitors wants to IPO soon, Market Kurly. They were popular in the beginning of the year, but they seemed to have disappeared lately. Might not be much of a worry. So only concern on this front will be Ebay Korea/ Shinsegae at the current time. They launched a program to provide 480 million $ to small businesses and farmers. This will probably help bring in more quality and diversity in produce selection. Overall quality wise I’ve been more impressed with coupang fresh compared to majority of competitors. Don’t be misled when they say the fresh fulfillment center footprint is double that of competitors. The keywords are they “believe” and “online competitor”. There is probably only couple fully online grocery delivery competitors and they are relatively young and small compared to coupang.
Coupang Eats:
This is their food delivery service. Supposedly it has been the most downloaded app on both iOS and android. Android downloads overall, Coupang eats – 5M+, yogiyo – 10M+, delivery hero – 10M+. They are catching up in downloads to the long-time duopoly of delivery hero and yogiyo. In all Korean app stores they are in the top 5 charts. Also, they state that it’s been growing extremely fast. They have been doing a lot of promotion from what I can see. These aren’t your 2$ type ones, more on the lines of save 8-15$ on your order of at least 15-20$. I recently tried to use the competitions app after not using it for a long time and its clustered and not that great to use. They have Eats Originals, its Coupang Eats exclusive partners. This year they have been adding a lot of them compared to the competition. There’s a lot of more positives for this service from what I can tell at this point. I asked several friends and family their choices and it’s seem younger people are using coupang eats more and older will stick with what they usually used.
Coupang ads:
According to their site for every 2 people 1 person uses coupang. Ads are done well on the app. I never noticed it that much, they are intergraded in a way that just flows with everything, and everything is related to the page you are on or what you search. You also have coupang recommended which I noticed a lot of people tend to choose over other options when picking a product. This is probably what contributes to triple YoY in q3.
Coupang Play:
This is their streaming service which is included with wow membership. This seems to be a pit of money loss in my opinion. They have been acquiring a lot of Korean and foreign media content. They just released their exclusive drama One Ordinary Day, haven’t heard any talks about it yet but Suzy is Bae. They have some other original content but it’s more like Netflix originals in the sense they just get exclusive streaming rights. They been advertising their live sports broadcasting and Live concert with Coldplay coming up.
Coupang Flex:
This is Amazon flex pretty much or like GRABS package delivery service. So, you can work part time and deliver packages. I’ve seen a lot of people doing this lately from students to older folks. They said that flex is growing a lot so this might help elevate the worker shortage.
Active customer yoy growing by 20%. But 5% sacrificed to meet up with customer expectations. Demand high but they arent able to fulfill every order, they pick and choose customers. Pretty much just prioritizing long term vs short term customers. Will they be able to bring back those customers they neglected? It doesn’t seem that they are considering this at the present. Competitors not affecting them supposedly is bullshit. If they remain competitive, I’m sure things will work out. Record capacity in logistics. Fulfillment and logistics will be majority of their focus in long term growth.
Overseas expansion plan wasn’t very clear and the thing I was originally bullish on. They just keep repeating the same thing that they are positive on it. Since the other guy created his CPNG post I’ve become more bearish overall. For Japan and Taiwan all they seem to be doing is small time delivery like food and necessities. I guess we must wait and see or get more first-hand experience from the area. If anyone lives there or has experience, please chime in!
I asked several friends from Vietnam, Thailand, and Malaysia about their market. I think GRAB and homegrown operations could take away expansion plans in SEA. Vietnam is majority GRAB, and they are looking to expand more into Vietnam also. Then theres Vietnams Tiki which is growing more daily and looking to IPO. If they are just going to do what they are doing in Japan and Taiwan, then it’s not going to work out. In Thailand majority is grab and its looking like there will be no room for coupang to move. Malaysia is the only one that seems to be a low barrier of entry. Though GRAB is very aggressive in their future expansions into the rest of SEA and into other sectors.
I think I was originally bullish on the company based on feels lol. I’ve been using them for the past couple years and been extremely satisfied with all parts of the service. So, their focus on servicing long term customers first is probably working well for me and customer retention. But recently I have become more bearish on the company due to Ebay Korea acquisition and the DD in the other CPNG forum. Also, slow expansion into other countries is not looking good in my opinion.