Coupang Inc, the South Korean e-commerce pioneer that has lost billions of dollars since its founding, is rolling out an army of robots at fulfillment centers in a bid to reach profitability.
The nation’s answer to Amazon.com Inc, Coupang burned cash by building distribution centers around the country that could help it push the boundaries of speedy delivery with broad selection. Now the company is closing in on breaking even, with analysts projecting it would turn a profit for the second straight quarter and then report its first annual operating profit this year.
The extreme automation was on display on a cold day this month at a Coupang facility in the southern city of Daegu. Squat autonomously guided vehicles marched toward a collection point like school kids lining up for lunch.
Photo: Reuters
The machines, which can carry 1,000kg, look like bookshelves riding on Roomba cleaners, delivering payloads to pickers and sorters. The workload for humans has been cut by about 65 percent.
Coupang has invested about US$260 million in the 12-story fulfillment operation in Daegu, and it is revealing its humming, artificial-intelligence-directed nerve center for the first time. The typically low-profile company is going public because it plans to adopt this kind of automation in other facilities.
“There are more expansion plans,” E.J. Choi, regional director of fulfillment services, told Bloomberg TV at the Daegu fulfillment center.
The new facility provides a model for improving the “effectiveness of how we operate to continue to deliver our customer service, while we are reducing the intensity of our workers’ workloads.”
The number of customers continued to increase even though a recent price hike as the company pushed to deliver products faster and in a wider swath of regions.
Still, Coupang’s stock is off by more than half since its listing in New York in March 2021 at US$35 per share.
The company has been caught up in controversies in the past few years, with a fire at one of its fulfillment centers in Icheon in 2021, while staff continued to ask for better working conditions. It has pledged to secure safety at workplaces and started to offer healthcare benefits to employees.
Under the guidance of Coupang founder Bom Kim, who has stepped down from his positions at a Korean subsidiary to lead overseas businesses, Coupang is pushing to expand new markets in Taiwan and Japan.
“We’re excited about the long-term opportunity and markets beyond Korea,” Kim said on a call with investors in November last year. “When we do invest more, it’s a reflection of that confidence.”
Coupang has more than 100 fulfillment and logistics centers in South Korea, but has yet to build such automation-based facilities overseas and has not revealed detailed expansion plans.
That could be the most challenging task for Coupang, as it has to compete against big tech companies such as Amazon, Blue Lotus Capital Advisors Ltd (藍蓮花資本顧問) analyst Shawn Yang (楊子瀟) said.
“I think at least now it’s full of challenge because global expansion is not something very easy,” Yang told Bloomberg TV.
Beyond the familiar huge Internet retailers like Amazon and Alibaba Group Holding Ltd (阿里巴巴), “there are some other players, like Shein, even TikTok wants to do its own e-commerce. So it’s going to be a very crowded business,” he said.
Coupang is determined to keep rolling out the robots. The company sees Daegu as the beginning, not the end of its efforts.
“These are very modular and flexible systems,” Choi said. “We can easily replicate this in other locations.”
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