Coupang ramps up Taiwan push amid K-beauty boom, US tariffs

Coupang Inc., South Korea’s largest e-commerce platform, said on Wednesday it will expand investment to strengthen overnight delivery services in Taiwan, a key growth market for Korean cosmetics and electronics exporters.

Taiwan led Coupang’s second-quarter earnings growth. Sales from key businesses in the island state, including Rocket Delivery and its online goods platform Farfetch, rose 33% from a year earlier to 1.67 trillion won ($1.2 billion).

In the April-June quarter, Coupang posted its highest-ever quarterly revenue of 11.98 trillion won. It recorded an operating profit of 209.3 billion won, reversing a loss in the year-earlier period.

Coupang did not disclose the size of its new investment in Taiwan, nor provide details on its expansion plans in the country.

However, industry observers expect the company to boost logistics capabilities and extend its delivery network across major cities and regional markets.

AT THE EXPENSE OF SHORT-TERM PROFITABILITY

Gaurav Anand, chief financial officer of Coupang, said during the company’s second-quarter conference call that Taiwan still has significant room for growth.

He noted that increased spending in Taiwan is expected to widen the company’s adjusted earnings before interest, tax, depreciation and amortization loss to between $900 million and $950 million this year, up from a previous estimate of $750 million.

The New York-listed company is signaling a focus on long-term growth opportunities over short-term profitability.

“In the second quarter, both revenue and customer numbers in Taiwan grew by 54% and 40%, respectively, compared to the previous quarter,” said Coupang Chairman Bom Kim.

South Korean small and medium-sized enterprises (SMEs) are capitalizing on growing global demand for Korean food and beauty products.

In response to new US tariffs, they are expected to step up shipments to Taiwan to diversify export markets.

In the first half of this year, South Korean SMEs’ exports to Taiwan jumped 23.3% on-year to $1.58 billion, driven by cosmetics and electronic devices.

Their shipments to the country climbed by 42.8% and 32.3% from the year prior, respectively, according to the Ministry of SMEs and Startups.

“As export conditions tighten due to tariffs, we expect to see an expansion in channels like Taiwan’s Rocket Delivery and Rocket Direct,” said an official at a retail company. 

Since its foray into Taiwan in 2022, Coupang has aggressively rolled out promotions, offering Korean goods at prices 40% to 60% lower than local competitors, as well as 30% discount coupons.

The company is also expanding next-day delivery – significantly faster than the typical two- to six-day shipping offered by rivals.

In the first quarter, Coupang launched its “WOW Membership” service in Taiwan, providing unlimited free Rocket Delivery for a monthly fee of about $2.

Write to Hun-Hyoung Ha at hhh@hankyung.com
 

Yeonhee Kim edited this article.