Detailed narrative
Customer Reacquisition and Spend Trends
Coupang's Product Commerce segment saw its revenue growth increase to 8% year-over-year in constant currency. The company highlighted that the vast majority of customer spend never moved, and the minority that did leave has largely returned to full prior spend levels, now compounding at high rates.
Excluding the small cohort of customers who left during the data incident and have not yet returned, the underlying customer spend is growing around 16% year-over-year. New customer additions continue, with total WOW membership now exceeding pre-incident levels, indicating future revenue growth on a lag.
Margin Recovery Strategy and Outlook
The company's current margin pressure is attributed to temporary factors: capacity planned against pre-incident demand, missing volume-based supply chain savings, and deliberately increased marketing spend for customer reacquisition. Management chose not to cut costs significantly to preserve customer experience and expects to grow into capacity.
They anticipate Product Commerce adjusted EBITDA margins to return to pre-incident levels by mid-2027, with improvements becoming more evident beyond Q3 FY26, as these temporary headwind📎s are mitigated.
Taiwan Expansion and Growth Trajectory
In Taiwan, Coupang has rapidly built out an end-to-end fulfillment and logistics network, achieving Dawn Delivery in just one year, a process that took Korea four years. This accelerated progress is due to inheriting over a decade of technology and process innovation from Korean operations.
The focus is now on expanding selection, which is currently a fraction of Korea's. Early cohorts in Taiwan are showing retention and spend growth patterns similar to Korea's cohorts at the same age, suggesting Taiwan is on a similar long-term compounding curve.
Developing Offerings Evolution and Discipline
Coupang's disciplined investment approach in developing offerings is exemplified by Eats in Korea, which has completed its full cycle from modest investment to becoming self-funding. Rocket Now in Japan is now in its early investment stage, with Eats and Rocket Now combined being sustainable.
The company is also extending Eats' capabilities to non-food on-demand delivery. This model of disciplined entry, validation, scale, and funding successors is applied across new markets and categories.
AI as a Business Multiplier
AI is already deployed across various parts of Coupang's business, including operations, fulfillment, logistics, supply chain, pricing, advertising, and customer service, driving improvements in service levels and cost efficiency. The company views AI as a multiplier for its 15 years of built assets—physical network, operating data, and direct customer relationships.
AI is expected to enhance discovery, personalization, and service for customers, compound productivity, lower costs, and raise returns for merchants using margin-accretive offerings, thereby expanding the addressable market.
Fulfillment Center Fire Incident
A fire at one of Coupang's fulfillment centers in Korea in July has not significantly impacted revenue or the ability to meet customer demand, thanks to leveraging the broader logistics network. The estimated total carrying value of owned inventory and fixed assets at the facility, plus obligations to sellers, is approximately $246 million.
Coupang maintains insurance coverage for fire and intends to pursue claims, with any associated losses and recoveries to be recognized in future quarters starting in Q3.