[The Editors' Verdict] Coupang Facing Its Own Reckoning

New Phase of E-commerce Market Segmentation and Fierce Competition
Doubts Remain Over the Effectiveness of the 'Made in Korea' Strategy

The reckless charge of C-commerce platforms like AliExpress and Temu is essentially the same tactic as Coupang's. They are willing to endure losses to deeply penetrate online consumer sentiment and dominate consumer habits and the market. The strategy simply diverges into the fastest (Coupang) and the cheapest (C-commerce) approaches.

After seemingly breaking free from the structure of planned losses, Coupang recorded a net loss of 31.8 billion KRW in the first quarter of this year, turning to a deficit for the first time in seven quarters due to the impact of the C-commerce onslaught. This reality can therefore be seen as Coupang facing the consequences of its own actions.

With massive direct purchases and the establishment of large-scale 'warehouse-style department stores (logistics centers),' Coupang's marketing strategy of delivering products as early as today, or by tomorrow at the latest, can be considered settled. Coupang has preempted the Korean market in the style of Amazon, which has not yet fully entered. The significance of C-commerce lies in how easily cracks can form in the domestic e-commerce market, which has been reorganized around Coupang over the past few years.

As trade barriers continue to lower and choices expand, consumer behavior is finely distinguishing between products that need to be delivered as quickly as possible and those where price is the main factor. This, combined with the low-price offensive from small and medium Chinese manufacturers targeting Korea as a breakthrough to overcome various global sanctions and domestic recession, is the result.

If Coupang's challenge during the settling phase was a simple calculation, now it must solve a much more complex equation. Amazon, having glimpsed the potential of the Korean market through C-commerce, has started free shipping; Daiso is rapidly expanding its online sales network; and Naver has launched same-day and Sunday delivery services. These realities increase the complexity of the equation.

Among the solutions proposed by Coupang, the notable one is the plan to expand the scale of direct purchases of Korean-made products (from 17 trillion KRW last year to 22 trillion KRW this year). They aim to promote premium marketing under the banner of 'Made in Korea.' While this is commendable as it could broaden sales channels for domestic manufacturers, it is questionable whether a mid-to-low price and cost-effective platform can align with the concept of premium to reclaim markets lost to C-commerce or create new markets.

Moreover, it is reasonable to view the consumption tendencies of the MZ generation (Millennials + Generation Z), major players in the e-commerce market, as nearly non-nationalistic. It is also uncertain whether the lock-in effect on paid members, which is close to 60%, can be maintained despite monthly fee increases.

Whether Coupang likes it or not, it has taken on the unfortunate role of confirming the market potential to domestic and foreign companies. Kim Beom-seok, Chairman of Coupang, noted, "The entry of Chinese commerce companies reminds us that market entry barriers are low and that consumers can switch to other shopping options within seconds with just one click," which is no different from acknowledging that the diversification and competition in the domestic e-commerce market have restarted in an entirely new form.

It took only one to two years for the effects of the C-commerce onslaught to become visibly confirmed. The dynamism is too great to predict how the market landscape will transform one to two years from now.