Top e-commerce operator under investigation
Fair Trade Commission (FTC) officials recently visited Coupang’s head office in Seoul to probe the country’s leading e-commerce operator on suspicion of unfair trade practices.
The field inspection came after a few companies cried foul at Coupang’s business practices with regard to its suppliers. The FTC iterated that it will instantly take measures in case there are any irregularities.
Coupang told media outlets that it will sincerely cooperate with the anti-trust watchdog.
WeMakePrice, the second-largest e-commerce company, reported Coupang to the FTC last month.
Coupang urged its suppliers to assume its sales promotion costs while preventing them from providing to its competitors, according to WeMakePrice.
LG Household & Health Care, an affiliate of LG Group, came up with a similar accusation.
Woowa Brothers, which holds the country’s top food delivery app operator “Baedal minjok,” also lodged a complaint with the anti-trust agency.
Woowa argued that Coupang solicited restaurant owners by promising low commission fees in return for striking exclusive contracts with Coupang’s food delivery service.
Coupang flatly rebuffed the charges by noting that its guideline does not allow the e-commerce giant to pass the costs of marketing or discounts to its suppliers.
It remains to be seen how the FTC will conclude on the investigation.
In case the FTC decides against Coupang, it will deal a blow to the online retailer, which proactively expands its sales at the expense of profitability.
Coupang’s top line has skyrocketed over the past few years. But it recorded an operating loss of almost $1 billion last year and its accumulated losses since its foundation in 2013 topped $2.5 billion.
Despite the snowballing losses, Coupang shareholders keep breathing cash into the money-losing company while its leaders continue to make aggressive investments.
Against this backdrop, observers are split into two opposing camps – some say that Coupang’s potential is very strong while others worry about the company’s profitability.