Market Kurly's sales surge 49% on-year in Q1

South Korea’s Kurly Inc., the operator of grocery delivery platform Market Kurly, achieved 641.7 billion won ($511.6 million) in gross merchandise value (GMV), or total sales monetary value of online retail sales, during the first quarter of this year, up 49.2% compared with the same period of 2021, according to e-commerce sources on Thursday.

This compares with an 11.8% increase in local online shopping GMV during the same period. Online retail giant SSG.COM saw a 23% rise and Gmarket Global, formerly eBay Korea before conglomerate Shinsegae Group acquired it in 2021, had a 14% decrease in GMV in the same period.  

This will boost Kurly’s initial public offering this year, market watchers say. The grocery delivery service provider applied for a preliminary review of its IPO in March and is waiting for the Korea Exchange’s approval.  

Kurly's GMV has steadily grown, logging 160 billion won in 2018, 450 billion won in 2019, 1.2 trillion won in 2020 and 2 trillion won last year. 

“The 641.7 billion won GMV in the first quarter means buying fresh food online has become new normal,” a Kurly official said. “We believe consumers will keep purchasing groceries online in the post-pandemic era,” the official added.        

Kurly’s quarterly contribution margin, the selling price per unit minus variable costs per unit, has been positive since 2019. Kurly’s operating profit will be in black once the contribution margin rises above fixed costs such as equipment and labor costs.  

However, some market watchers say the company’s labor costs should be regarded as variable costs and not fixed costs. Kurly employs in-house delivery professionals, and its labor costs for delivery workers increase in line with rising sales.      

To address the labor cost issue, Kurly has introduced a so-called curated marketplace service for non-food items. Through the service, the product manufacturer takes responsibility for storage and delivery of the items and Kurly only checks the product quality. In a bid to accelerate service operations, Kurly is set to launch the online payment system “Kurly Pay” this year, which will facilitate sales and delivery payments to manufacturers.  

Kurly’s IPO is expected to take place in July, becoming Korea’s first e-commerce platform to go public this year, to be followed by Shinsegae Group’s SSG.COM and Oasis Corp.

Founded in 2014, the unicorn startup garnered market attention with its “dawn delivery” service, which delivers products by 7 a.m. the next day if customers order before 11 p.m. the previous day. Last December, Kurly raised $210 million from Hong Kong-based private equity firm Anchor Equity Partners in pre-IPO funding, valued at 4 trillion won.

However, Kurly’s performance last year failed to ease investors’ concerns about its IPO plan. The company posted an operating loss of 217.7 billion won last year, up 87.2% from the previous year, according to its annual report in April. Selling and administrative expenses soared 79% to 511.3 billion won, overwhelming the gross profit of 293.5 billion won.   

Write to Seok-Cheol Choi at dolsoi@hankyung.com
Jihyun Kim edited this article.