“Korean Amazon” Faces Scandal After Scandal

The latest wave of tech company scandals has not skipped the Korean peninsula, where Coupang, once the most trusted name in Korean e-commerce, is now up to its neck in accusations of mismanagement, lawsuits, and bad press.

The story starts in 2014, when the Korean giant decided to take a page out of Amazon’s book by creating it’s “Rocket Delivery” brand, and alongside it, a huge logistic commitment of over 1 trillion Korean Won (almost 870 million USD). Most of the money was invested by Softbank, with a follow-up loan from Asia Trust for an additional 300 billion Won, leveraging their logistics centers. The “Rocket Delivery” initiative included constructing over 730,000 square feet of logistic centers and hiring 3,500 men, in order to get the service up and running within two years. What initially seemed like a smart move, and was condemned from the start by the local logistics and delivery community, is now proving to be the source of the company’s never-ending troubles.

The trouble for the Korean giant started with a group of employees known locally as “Coupang men,” a de-facto union for Coupang’s massive fleet of in-house delivery drivers.

The company is trying to dig its way out of a huge deficit by firing their drivers, the biggest drag on their budget, without cause or sufficient notice. Since they’re not making any urgent management moves first, they are violating Korean law.

Coupang made the bold choice to employ in-house delivery, a move that costs them about 200 billion South Korean Won (about 170 million USD) every year. This is all well and good except the company is in a deficit of over 1 trillion won (866 million USD) created over the past two years. The cost of their in-house delivery service is one of the key elements of that deficit. This deficit, analysts and employees think, is the reason Coupang is using shady tactics with their delivery fleet. Coupang Men are not going down without a fight, inciting what is named by local media as “The Delivery Revolution.”

But Coupang’s problems do not end with the age-old tale of corporation vs unionizing labor. The company has also lost a major case that forced Coupang to pay months of back pay to its drivers. It is reported that Coupang will need to spread 2-3 billion Won (around 1.7 million to 2.6 million USD) across 3,000 employees. The biggest issue employees and the public seem to have with this is Coupang’s questionable priorities.

While avoiding paying their drivers (and firing them without notice) and with the company in a deep deficit, Coupang is spending millions on a fancy new office that required a 100 billion Won deposit (almost 87 million USD) and costs a monthly rent of 15 billion Won (13 million USD). In parallel, the company is reportedly paying billions of dollars in salary, benefits, and stock options in order to lure foreign executives. They reportedly pay for luxury apartments in the best parts of South Korea’s major cities, including the now infamous Gangnam district of Seoul. They even went as far as to offer a high-ranking executive position to the “lover” of one of these executives, though internal voices in the company state they are woefully under qualified.

1 COMMENT

  1. I’m so glad I didn’t accept a position with them. Something felt icky during the interview process and now my spider sense is validated. Plus the looming N. Korea conflict….time to get the hell out of there.

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