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Money-losing online retailer set to face FTC probes

Coupang, Korea’s largest e-commerce operator by any measure, continues to grab headlines. This time around, it is about the Seoul-based company’s business practices.

Woowa Brothers, which owns the country’s leading food delivery app operator “Baedal Minjok,” started the campaign of criticizing Coupang across the board.

Last month, Woowa asked the Fair Trade Commission (FTC) to investigate the suspicions that Coupang carried out unfair trade practices.

Woowa claimed that Coupang solicited restaurant owners by promising low commission fees in return for exclusive contracts with Coupang’s own food delivery service.

This week, Coupang’s competitor and its supplier also took issue with the way how Coupang carries out its business.

WeMakePrice, an e-commerce operator, reported Coupang to the anti-trust agency for unfair practices.

Coupang tried to make its suppliers assume its sales promotion costs while urging them to stop providing goods to its competitors like WeMakePrice, according to the latter.

LG Household & Health Care also lodged a complaint with the FTC for a similar reason.

In response, Coupang countered its inside policy does not allow the outfit to pass the costs of marketing or discounts to its suppliers. And the company refuses to elaborate on the issue because the FTC will look into it.

The FTC is expected to look into the case to find out whether or not Coupang violated the relevant laws just as its competitors claim.

If the FTC concludes in favor of the above-mentioned accusers, it would mark another setback to Coupang, which faces accumulating losses.

Its loss amounted to nearly $1 billion last year, up more than 70 percent from a year ago. Its overall losses since its foundation in 2013 stand at more than $2.5 billion.

Despite the snowballing losses, Coupang vows to keep spending money to streamline its delivery system on the belief that its business eventually will become profitable.

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