'Everything I stored burned': Small sellers reel from Coupang Inc warehouse fire

By Bu Ae-ri, The Herald Business — Small business owners selling through Coupang Inc's Rocket Growth fulfillment service say the fire at the company's Incheon logistics center has left them facing a double blow: lost inventory and a sudden halt to sales that is squeezing their cash flow.

A 32-year-old Rocket Growth seller who goes by the surname Lee, and who sells household goods and toys, said Wednesday that roughly 900 products had been stored at the Incheon center. "At cost, that comes to 5 to 6 million won ($3,400 to $4,100); at retail, it exceeds 10 million won," Lee said. "If I factor in items I sent in earlier, the damage could be even greater."

Fire authorities declared initial containment of the blaze at Coupang Inc's No. 32 logistics center in Seoknam-dong, Seo-gu, Incheon, around 8 p.m. Tuesday, roughly 61 hours after the fire broke out. The precise cause and full extent of the damage are expected to be determined through a joint investigation and loss assessment once the fire is fully extinguished. Industry observers estimate total losses could run into the hundreds of billions of won, noting that the Incheon center is 2.3 times larger than the Coupang Inc distribution center in Icheon, Gyeonggi Province, that burned in 2021 — a fire that caused 340 billion won in losses. The Incheon center stored not only products purchased directly by Coupang Inc but also goods entrusted by third-party sellers through the Rocket Growth service for storage and delivery.

Beyond the inventory losses, Rocket Growth sellers are worried about a cash-flow crunch caused by the sales stoppage. Sellers typically pay upfront for merchandise, international freight and fulfillment fees, then recoup those costs through monthly settlement payments. With their stock wiped out all at once and sales suspended, many say they cannot recover the money they have already spent.

"Sales stopped immediately, and the whole system of covering costs through next month's settlement has fallen apart," Lee said. "Ultimately I have to dip into my savings or forgo my own salary just to restock."

The sales gap is also creating downstream damage. On Rocket Growth, a product going out of stock causes its sales index to fall, which in turn hurts search visibility and overall sales volume. Even if sellers order new stock from factories in China, production, shipping and customs clearance mean it takes at least 10 days before goods arrive in Korea — making it in effect impossible to keep selling during that period.

"Not only will my revenue drop because I cannot sell, but my sales index will fall too," Lee said. In seller community forums, similar concerns are multiplying: "If the out-of-stock status drags on and my search ranking drops, what do I do?" and "Compensation looks like it will take a long time — I'm worried about covering my costs in the meantime."

The scope of compensation sellers will be entitled to is also expected to become a point of contention. Under Coupang Inc's current Rocket Growth inventory compensation policy, sellers whose products are lost or damaged inside a Coupang Fulfillment Service facility are eligible for compensation subject to certain conditions.

However, the policy does not cover the full retail price of a product. Compensation is calculated based on the "final market consumer price" — which reflects actual selling prices over the preceding 90 days — minus value-added tax, sales commissions, inbound and outbound handling fees, and delivery charges. In effect, sellers receive only what they would have been paid out had the items sold normally.

Coupang Inc said in a notice to sellers that it would "promptly assess the damage as soon as the fire is fully extinguished and inform sellers of the exact situation and future action plan as quickly as possible." The company added that it would "actively review and pursue all possible follow-up measures to minimize the operational impact and losses for sellers." The notice, however, did not specify compensation criteria for lost inventory, a timeline for payouts, or whether sellers would be compensated for lost business during the sales suspension.