Daangn, a leading local community service in Korea, announced it achieved its first annual profit in eight years since its inception. This was particularly surprising and welcome news given that Daangn had been increasing its annual losses until just two years ago. The most effective factor in this turnaround was the revenue growth, which increased by 2.5 times compared to the previous year.
The reason Daangn had been incurring losses was quite different from commerce platforms like Coupang and Kurly. While commerce companies quickly grow their revenue through product sales, they often suffer chronic losses due to heavy cost structures.
However, Daangn's main issue was not cost management but the lack of a stable 'revenue source', a common problem for community services. This is evident from the fact that Daangn removed 'market' from its name.
Looking at Daangn's 2023 consolidated financial statements, personnel expenses (employee salaries: 49.25 billion won) and payment fees (50.51 billion won) combined account for 77.4% of the total operating expenses (128.89 billion won). Payment fees are likely related to service infrastructure costs, indicating that most of Daangn's expenses are used to maintain the community.