South Korean e-commerce firm Coupang is catching up with Shinsegae, one of the country's largest and oldest retail players, by closing the sales gap to less than 10 billion won ($7.5 million) from 1 trillion won a year ago, according to their earnings reports Friday.

The 13-year-old e-commerce operator's increasing number of paid subscribers is the main driver behind its improved performance, posing threats to conventional retail brands like Shinsegae.

According to Coupang's latest earnings report, the company's net revenue in the first quarter reached $5.8 billion, or 7.39 trillion won when calculated on an average exchange rate during the three-month period at 1,275.58 won.

Apart from the gain from a strong dollar, Coupang’s sales posted a 20-percent on-year growth, the company said.

During the same period, Shinsegae’s nine retail units, including hypermarket chain E-mart and online shopping unit SSG.com, logged combined sales of 7.4 trillion won.

The sales gap between Shinsegae and Coupang has narrowed to 9.9 billion won from around 1.2 trillion won recorded last year.

In terms of operating profit, Coupang also closed the gap between it and Shinsegae’s retail arms. Coupang’s operating profit in the January-March period came to 136.2 billion won, while the combined operating profits of Shinsegae’s nine retail arms reached 145.8 billion won.

“Based on its nationwide logistics network and rapid delivery service, Coupang is on E-mart's heels,” said Jung Yeon-sung, a business professor at Dankook University.

Other industry sources said the increased number of active users at Coupang has contributed to its growth and continues to impact the company’s future performance.

Coupang currently has 11 million paid subscribers, a significant increase from 4.7 million in 2020 and 9 million in 2021.

Backed by an increasing number of subscribers, Coupang has been posting improved performance since the third quarter of last year.

In the July-September period, Coupang swung back into the black for the first time since the company introduced its same-day or next-day Rocket Delivery service in 2014. Since then, Coupang has been posting profits for three consecutive quarters.