2024-04-13 08:19:56
Wow Membership Monthly 4,990 won → 7,890 won
Applicable to 14 million existing members from August
“Inevitability of increase due to expansion of rocket delivery”
Consumers backlash… Possibility of member churn
Coupang is raising the membership fee for its membership service, WoW, by nearly 60%. It has been more than 15 days since the free delivery service of the delivery application (app) ‘Coupang Eats‘ was launched for WoW members last month. WoW members, who numbered over 14 million as of the end of last year, are pouring out strong complaints, calling it “consumer deception.”
On the 12th, Coupang announced that it would change the WoW membership fee from 4,990 won per month to 7,890 won per month. This is an increase of 2,900 won (58.1%). The new rate system will apply to new subscribers from the 13th, and to existing members from August. The WoW membership fee, launched in October 2018, increased by 2,090 won (72.1%) from 2,900 won to 4,990 won in December 2021.
Coupang cites ‘strengthening member benefits’ as the reason for this price increase. Coupang has been providing free shipping and free returns to WoW members. Free access to ‘Coupang Play’, an online video service (OTT), is also provided. In addition, the Coupang Eats free delivery service began on the 26th of last month. As the quality of member service is being improved, such as by expanding the area where rocket delivery (same-day or next-day delivery) is available nationwide, the company is in the position that it has no choice but to raise rates to maintain service quality.
WoW members have more than doubled in three years, from 6 million at the end of 2020 to 14 million at the end of last year. It is estimated that the current number of members has increased further due to ticket sales and exclusive broadcasting of the Major League Baseball (MLB) opening game last month. A simple estimate of Coupang’s additional revenue generated by this rate increase is approximately 40 billion won per month or 500 billion won per year.
Complaints poured in among consumers. In response to the news of the rate increase on this day, online communities said, “They say they offer free delivery (Coupang Eats), but if the rate becomes expensive, isn’t it just a scam?” “I don’t even look at Coupang Play, but it’s too much to raise the price by 3,000 won at a time.” “Now Naver also says ‘arrives tomorrow’ ‘I don’t know why I have to pay more for Coupang membership since it guarantees it,’ continued a series of negative responses.
There are also criticisms about the uniform rate system. Mr. Kim (26), an office worker who has only used early morning delivery of fresh food through Coupang, said, “I know there are many member benefits, but I think it is unreasonable to have to pay more for other services that I don’t use anyway.” He added, “It is only available until July before the rates rise. “I plan to use it,” he said.
There is also an analysis that Coupang raised membership fees in response to the rapid penetration of Chinese e-commerce companies such as AliExpress and Temu into the country. This is because it is time to secure cash for investment. Coupang actually announced last month that it would invest more than 3 trillion won over three years from this year to 2026 to expand its logistics network. This was shortly after news broke that Ali was planning to invest $1.1 billion (about 1.5 trillion won) over three years in targeting the Korean market.
However, there is a possibility that the adverse effect of membership churn due to a fee increase may occur. So far, WoW membership has played a major role in Coupang’s growth with a strong ‘lock-in effect’. This means that a decline in WoW membership can directly lead to a decline in market dominance. Housewife Lee (59) said, “I have been using Coupang for its low prices, but I think this rate increase is too large. If the membership fee increases further, I plan to move to another low- to mid-price platform that offers free shipping, such as Ali.”
Coupang explains that this is not a rate increase, but closer to becoming a reality. A Coupang official said, “Wow membership members save 9,000 won in shipping costs by ordering just three times a month, which is a greater benefit than the monthly fee,” adding, “Compared to major OTT membership plans such as Netflix or TVing, which cost 17,000 won per month, “It has overwhelming cost-effectiveness (price-performance ratio).”
Reporter Song Jin-ho [email protected]
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2024-04-13 08:19:56