Coupang has expanded its gift card sales channels offline after going online. With user metrics that wavered after a personal data leak incident showing signs of recovery, the move is seen as a strategy to bring back non-members and dormant users.

Coupang began selling physical gift cards at Seven Eleven convenience stores on March 31. Coupang launched online gift cards on KakaoTalk Gift six months ago in September last year and has now introduced offline physical cards.

Gift cards secure outlets through KakaoTalk and convenience stores

Gift cards are anonymous prepaid cards, similar to gift certificates, that can be bought online or offline and used to purchase products. They are popular as gifts because users can choose items within a set spending limit on a specific platform or at specific stores. Companies that have launched gift cards, such as Olive Young and Daiso, sell them on their own platforms or through KakaoTalk Gift. Coupang also launched online gift cards in the second half of last year on its app and on KakaoTalk Gift.

Offline, convenience stores have become major outlets for prepaid cards by selling Google Play gift cards. Coupang's entry into Seven Eleven is also seen as a move that taps into this distribution structure. Coupang is reported to have decided to sell physical cards based on demand for its earlier online gift cards.

Coupang, in particular, said its online cards secured a new user base of corporate customers. It said major companies buy gift cards in bulk for employee welfare and marketing promotions. Once such cards are registered after being sold in volume to corporate clients, Coupang can gain potential customers.

User recovery in March; long-term customer base including non-members and dormant members expected

The industry views Coupang's expansion of gift card outlets as an extension of its strategy to prevent user churn and drive recovery. It aims for a lock-in effect centered on Wow membership while absorbing demand from non-members, dormant users and gift buyers through gift cards. As the gift card strategy that began online expands offline, Coupang's user recovery strategy is also becoming more varied.

With user indicators that fell in the period after the personal data leak incident in November last year, during the fourth quarter, showing signs of recovery in the first quarter this year, the company is expected to be able to increase purchases by Coupang users through various strategies including gift cards.

According to Coupang, the number of customers who used Coupang at least once in the fourth quarter last year, its active customers, was tallied at 24.6 million. That was down 100,000 from 24.7 million in the third quarter, and the company viewed the customer information leak incident as having had an impact.

But IGAWorks Mobile Index data for Android and iOS showed Coupang's weekly users totaled 28,281,963 in March 9 to 15, close to 29,080,952 before the leak incident occurred. That is interpreted as meaning Coupang's user base is recovering.

With user numbers entering a recovery phase, gift cards are expected to be a tool to bring back non-members and dormant users. Consumers who have not joined the paid Wow membership can also use gift cards, which could lead to app revisits or purchases. Coupang has included the beauty service R.LUX and the fresh food delivery service Premium Fresh as places where gift cards can be used, and it plans to launch a Coupang Eats-only card on April 8.

In particular, gift cards differ in nature from short-term compensation measures and are expected to drive a lock-in effect for the Coupang platform from a longer-term perspective. If compensation coupons temporarily prevented existing users from leaving after the leak incident, gift cards are a longer-term strategy to secure external users based on gift demand and offline sales.

Physical cards can also be expected to gain exposure to convenience store visitors, helping diversify the routes of user inflows that have been centered online. This structure can secure broader user touchpoints than simple promotions.

Meanwhile, Coupang is reported not to be considering expanding offline outlets for physical gift cards for now.

An industry official said, "Gift cards have the advantage of being convenient as gifts for both the giver and the recipient. In fact, receiving a prepaid card for a specific platform has the advantage of leading to purchases, so Coupang is seen as diversifying its user inflow routes from a long-term perspective."