Coupang has succeeded in becoming the leading e-commerce company in South Korea by following the business model of Amazon. As its less than usual stock prices fuel investor skepticism, Coupang is resorting to Amazon’s well-known tactics, that of raising membership fees to increase profit.
Kim Bom-suk, the CEO of Coupang, was confident during Wednesday’s earnings call. He said that the profitability of the company would increase steadily over the next few quarters. While the company witnessed some negatives like inflation and disruptions in the supply chain, the overall result was positive. This happened because of rapid improvements in technology and process, adroit utilization of capacity, optimization of the supply chain, as well as advertisement scaling.
Out of 37 million online shoppers in South Korea, 17.94 million use Coupang. The number of paid members benefiting from accelerated deliveries and return of service stands at 9 million. With this huge customer base as a backing, Coupang has raised membership fees for the first time in its history. From June, subscribers will pay monthly service charges of 4,990 won ($3.87). This is up from the 2,900 won that they used to pay earlier.
This hike in membership is a tactic used by Amazon. In each and every country that Amazon sets foot in, it builds up a huge customer base to the point of a monopoly, after which it raises yearly Amazon Prime fees to churn out profit. Coupang is playing it by the book, emulating Amazon’s tactics to benefit from its massive customer base.