Coupang launches loan service

Headquarters of Coupang in Seoul. (Coupang)

South Korean e-commerce giant Coupang is launching a service offering loans to small businesses on its online platform while allowing customers to pay for purchases in installments, a filing with the Financial Watch Service said Monday.

Coupang Financial, a subsidiary set up in January this year, will lead the new venture which the top financial watchdog approved on Friday. Some analysts see the expansion as part of Coupang’s efforts to offset losses, which have grown over the years.

Coupang’s operating losses reached $1.4 billion last year, three times what they were the year before. They were also at an all-time high since 2010, when the company was founded.

Coupang stock closed at $19.39 last Friday, down nearly 60% from its original closing price of $49.25 on March 11, 2021, when it began trading on the New York stock market.

Coupang hasn’t made a profit – quarterly or annually – since 2014, when it launched its “Rocket Delivery” service in Korea, which promises delivery within 24 hours and helped the company gain exposure.

Coupang, which also runs entertainment services, made 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 said the company would see a gradual improvement in profitability. Credit Suisse said it expects Coupang’s first profit in 2024. The company’s market share would climb to 26% by then, from 16% 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 giving details about the service.

Providing loans to small businesses and credit to their customers is just one way for the e-commerce giant to diversify, an industry source said, noting that authorities are more receptive than ever to the business expansion led by technology companies.

A month earlier, the Financial Services Commission had convened its first monthly meeting on deregulation, with its chief emphasizing the removal of obstacles preventing companies from starting something new to foster “innovation” – a theme who set the tone for policy-making at the top financial regulator.

By Choi Si-young ([email protected])

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