What: Coupang's impressive 2023 earnings highlight its growing threat to traditional retail leaders Shinsegae and Lotte in South Korea.

Why it is important: The success of Coupang underscores a significant shift in consumer behaviour towards online shopping, challenging the established business models of traditional retail powerhouses and signalling a broader transformation within the retail sector.

Coupang, South Korea's leading e-commerce platform, has marked a pivotal moment in the retail industry with its 2023 earnings report, showcasing a remarkable turnaround with an operating profit of USD $470 million and sales exceeding 30 trillion won for the first time. This achievement not only highlights Coupang's growing dominance in the e-commerce space but also poses a significant challenge to traditional retail giants Shinsegae and Lotte, which have been facing declining sales amid the rise of online shopping.

Coupang's success is largely attributed to its innovative services like Rocket Delivery and Rocket Fresh, which offer super-fast delivery of a wide range of products, from daily necessities to fresh foods. This has significantly enhanced Coupang's appeal to over 14 million subscription-based users, further solidifying its position in the market.

In contrast, traditional retailers such as Shinsegae's E-Mart and Lotte Shopping have reported operating losses and declining sales, respectively, underscoring the challenges faced by offline retail channels in competing with the convenience and price competitiveness of e-commerce platforms.

Despite Coupang's recent profitability, the company still faces the task of addressing its accumulated losses, which exceed 6 trillion won, largely due to its substantial investments in logistics and infrastructure. Moreover, Coupang's stock performance has been lacklustre, with prices stagnating below USD $20 for the past two years after peaking at nearly $50 USD per share post-listing in March 2021.

Industry insiders caution against prematurely dismissing the traditional retail sector's viability, noting that Shinsegae and Lotte have developed stable revenue structures over decades and continue to attract customers through experiential events and offerings in their physical stores.

Coupang poses increasing threat to Shinsegae, Lotte amid soaring profits