Coupang warehouse fire leaves sellers, residents anxious as compensation talks loom

As the fire at Coupang Inc's Incheon logistics center entered its fifth day, attention turned to compensation for Rocket Growth sellers and nearby residents. Sellers are describing a triple burden: inventory losses, suspended sales and a cash crunch. With the blaze still not fully extinguished, both Coupang and its sellers are anxiously waiting for the fire to be brought under control before any damage assessment can begin.

A 32-year-old Rocket Growth seller surnamed Lee, who sells household goods and toys, said Wednesday that roughly 900 products had been confirmed stored at the Incheon warehouse. "At cost, that comes to between 5 million and 6 million won, and more than 10 million won at retail price," Lee said. "If I include items I shipped in earlier, the losses could be even larger." Lee added that the sudden halt in sales had disrupted the monthly settlement cycle used to cover operating costs. "Ultimately I'll have to dip into my savings or forgo my own salary just to restock," Lee said.

Seller community forums have been flooded with similar concerns. Posts warn of search-ranking drops caused by prolonged out-of-stock status, and sellers have expressed worry about covering expenses while waiting for compensation that could take a long time to arrive.

The fire broke out Saturday at Coupang's No. 32 logistics center in Seoknam-dong, Seohaegu, Incheon. The main flames were brought under control after 61 hours, but residual fire remains and firefighting operations are continuing. Fire authorities and police plan to form a joint investigation team after the fire is fully extinguished to determine the cause and assess the full extent of damage.

Once the investigation is complete and the damage picture becomes clear, compensation discussions are expected to begin in earnest. The warehouse held not only goods purchased directly by Coupang but also inventory belonging to Rocket Growth sellers. Rocket Growth is a fulfillment service in which sellers consign their products to Coupang's logistics centers, with Coupang handling storage, packaging and delivery on their behalf.

Coupang notified sellers through its Wing Seller Center on Tuesday that it would assess the damage after the fire is extinguished and then prepare a compensation plan. "As soon as firefighting is complete, we will promptly confirm the damage and inform sellers of the exact situation and our planned next steps," the company said. "We will actively review and pursue every possible follow-up measure to minimize operational disruption and losses."

How much compensation sellers can ultimately receive is the central question. The 2021 fire at Coupang's Deokpyeong logistics center in Icheon, Gyeonggi Province, predated the launch of the Rocket Growth service, meaning only directly purchased inventory was destroyed and seller compensation was not an issue.

Under the current Rocket Growth policy, Coupang compensates sellers for lost or damaged inventory inside its warehouses by calculating the net settlement amount after deducting sales commissions, inbound and outbound handling fees and other charges. Compensation is capped by product category: 3 million won for computers, digital devices and home appliances; 1.5 million won for baby products, kitchenware and stationery; and 1 million won for beauty, apparel and food items.

Insurance is expected to cover a significant portion of sellers' inventory losses. The Incheon No. 32 logistics center carried a total of 870 billion won in insurance coverage based on the insured amounts. A real estate fund managed by IGIS Asset Management, which owns the building, took out roughly 440 billion won in coverage for building damage and business interruption losses, while Coupang as the tenant secured approximately 430 billion won covering internal inventory and logistics equipment. Consigned seller inventory is also included among the insured assets. Given the scale of the contracts, seven non-life insurers — including DB Insurance and Meritz Fire & Marine Insurance — shared the risk, and some have further distributed their exposure through domestic and international reinsurers.

The final insurance payout will be determined after an investigation into the fire's cause and a loss-adjustment process in which insurers formally assess the actual damage. The inventory insurance proceeds will be paid to Coupang, and compensation to individual sellers will be handled separately under Coupang's own compensation policy.

The process will also take time. One insurance industry official said that even inventory not directly burned is likely to be treated as a total loss if it was exposed to intense heat, smoke or firefighting water. That means the actual quantity and condition of every item must be verified individually, a process that could take several months before a final loss figure is reached. Another official said the scope of compensation and each insurer's share of liability cannot be determined until both the loss amount and the cause of the fire are confirmed.

After the 2021 Deokpyeong logistics center fire in Icheon, Coupang put together a compensation package for nearby residents. More than 300 households in the Majang-myeon area — outside the company's delivery zone — were promised free Rocket Delivery service, health checkups, coverage of fire-related medical expenses, full purchase of crops from Deokpyeong 1-ri, compensation for water and soil contamination based on National Forensic Service findings, and cleanup of scattered debris. The package came after residents complained that groundwater used for drinking had been contaminated by firefighting water, a concern borne out when a private water-quality test commissioned by Coupang detected E. coli and found the water unfit for consumption.

Resident compensation is likely to come up again this time. After the fire broke out, an evacuation order was issued for residents within a 116-meter radius of the site due to concerns about structural collapse. The order was lifted at 11 p.m. Monday, but some residents remain at evacuation shelters, worried about smoke and particulate exposure. If evidence emerges that negligence in safety management contributed to the fire, the scale of compensation could grow further.

Lee Young-ju, a professor in the fire and disaster prevention department at the University of Seoul, said the exact losses cannot be known until the fire is extinguished and a cause analysis is completed. "Depending on any legal violations or management failures that are found, the matter could lead to litigation," Lee said.

Coupang's own losses are also expected to be substantial. Under guidelines set out in fire investigation and reporting regulations issued by the National Fire Agency, losses are calculated by applying construction cost per unit area, residual value ratios and damage rates. The precise figure will only emerge after the investigation, but the fact that the Incheon warehouse was completed in 2023 means a high residual value ratio is likely to apply. When primary structural elements are rendered unusable, a damage rate of 90 to 100 percent is typically applied. Assuming floors 6 through 8 — roughly 112,125 square meters — were effectively destroyed, building damage alone is estimated at between 79 billion and 92 billion won.

The Deokpyeong logistics center in Icheon, which was smaller at 127,178 square meters, burned to the ground and left Coupang with $296 million in losses — about 340 billion won at the exchange rate at the time. That broke down into $158 million in inventory losses, $127 million in real estate and equipment losses, and $11 million in other losses. Coupang's operating loss that year reached a record $1.49 billion.

Kong Ha-seong, a professor in the fire and disaster prevention department at Woosuk University, said the warehouse's high value — given how recently it was built — means the damage will not be small. "However, the final loss figure could ultimately be driven more by the contents — the stored products and automated equipment inside — than by the building itself," Kong said.