Coupang headquarters in Seoul. (Coupang)
South Korean e-commerce giant Coupang is starting a service offering loans to small businesses on its online platform while enabling its customers to pay for purchases in installments, a filing with the Financial Supervisory Service showed Monday.
Coupang Financial, a subsidiary created in January of this year, will lead the new business the top financial watchdog approved Friday. Some analysts consider the expansion part of Coupang’s efforts to offset losses, which have grown over the years.
Coupang’s operating losses rose to $1.4 billion last year, three times what they were the previous year. They were also at a record high since 2010 when the company was first established.
Coupang shares closed at $19.39 last Friday, a near 60 percent drop from its initial closing price of $49.25 on March 11, 2021, when it started trading on the New York Stock Exchange.
Coupang has not made a profit -- quarterly or yearly -- since 2014, when it launched its signature “Rocket Delivery” service in Korea, which promises delivery within 24 hours and helped the company rise to prominence.
Coupang, which also runs entertainment services, saw its first profit in the delivery business in the first quarter of this year, according to a filing with the US Securities Exchange Commission.
Referring to the surprise growth, Coupang’s chief financial officer has said the firm will see gradual improvement in its profitability. Credit Suisse said it expects Coupang’s first profit in 2024. The firm’s market share would soar to 26 percent by then, from 16 percent in 2020, it added.
“Coupang Financial plans to roll out financial products tailored to the needs of small- and medium-sized business owners,” Coupang said in a statement, without elaborating on details of the service.
Extending loans to small businesses and credit to their customers is just one way the e-commerce giant could branch out, one industry source said, noting authorities are receptive to business expansion led by technology companies more than ever.
A month earlier, the Financial Services Commission convened its first monthly meeting on deregulation, with its chief stressing removing barriers preventing companies from starting something new to foster “innovation” – a theme that has set the tone of policymaking at the top financial regulator.
By Choi Si-young (firstname.lastname@example.org