(Bloomberg) — Coupang Inc., South Korea’s leading e-commerce company, reported net losses widened in the second quarter after it spent heavily on expansion at home and abroad and a fire damaged one of its main fulfillment centers.
Sales at the company were up 71% to $4.5 billion in the quarter ended June, while the number of active customers increased 26% to 17 million. Net losses widened to $518.6 million, including $296 million attributed to lost inventory, equipment and other costs associated with the fire at its Icheon facility. Shares were down about 12% in after-hours trading for the U.S.-listed firm.
Coupang has gotten a boost from the accelerated shift to online shopping during the pandemic and has ventured into related new businesses such as quick grocery deliveries. The company, backed by SoftBank Group Corp., has also added Tokyo and Taipei to its one-hour delivery locations, covering a wide range of products from fresh food to daily necessities.
“We’ll test things that we’ve done before, we’ll test things we haven’t done before,” said Chief Executive Officer Bom Kim about Coupang’s international expansion. “You’ll see that the real capital investments come over time as our confidence grows and you’ll see big investments in the areas that we have the highest conviction around.”
Dubbed South Korea’s Amazon, Coupang in March pulled off the biggest listing on a U.S. exchange since Uber Technologies Inc. in 2019, making founder and Harvard dropout Kim one of the world’s richest people. It was also a coming-out party for the private firms and startups that for years operated under the shadow of the chaebol or family-run conglomerates like Samsung.
Read more: Coupang IPO Cements Shift Away From Chaebols Among Korea’s Elite
Its shares have slumped in recent weeks, however, and fell below its initial public offering price in May, largely driven by growing uncertainty about rising costs and competition. Naver Corp., which had South Korea’s largest volume of e-commerce transactions last year, plans to aggressively grow in cooperation with CJ Logistics Corp., the country’s biggest cargo delivery company. Shinsegae Group’s E-Mart Inc. plans to acquire 80% of EBay Inc.’s Korea business for $3 billion, which would make it the second largest e-commerce operator after Coupang.
Coupang is also coping with a consumer backlash back home. The country’s Fair Trade Commission has launched a probe into allegations that Coupang manipulated search algorithms to prioritize its own products over those of suppliers.
(Updates with CEO quote in fourth paragraph)
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