Coupang raises service charge to cut losses
But an analyst fears that this will fall short of reaching profitability.
Coupang has started raising service charges as part of efforts as part of a strategic shift focusing on an offensive strategy to bulk up while tolerating losses, Korea Bizwire reported.
The company has raised monthly subscription fees for Wow membership from $2.43 (KRW2,900) to $4.17 (KRW4,990), applying the fee only to new subscribers, the company’s first raise since the subscription service was first introduced in 2019.
Coupang Eats, an online food platform under Coupang, also replaced its commission discount programs for restaurant members with proportional service charges, resulting in a de facto increase to its service commissions.
Experts speculate that Coupang, which has been under a lot of pressure to turn a profit since the company was listed on the New York stock market last March, is beginning to take measures to improve its profitability.
“Expanding the proportion of sales from additional services may help improve the company’s financial circumstances, but it is still expected to fall short of reaching profitability,” Kiwoom Securities analyst Park Sang-joon said.