South Korea's e-commerce landscape, one of the largest and most competitive in the world, is currently grappling with significant financial distress. The Fair Trade Commission of South Korea has launched an investigation into two prominent e-commerce platforms, Ticketmonster (TMON) and WeMakePrice, both under the Qoo10 umbrella, for failing to settle payments with merchants.
The investigation reveals that approximately 60,000 merchants are collectively owed $123 million (170 billion KRW). Both TMON and WeMakePrice are struggling with cash flow issues and have responded by halting consumer refunds. Additionally, local banks have suspended loan services to these platforms due to ongoing payment delays.
This crisis highlights the intense competition within South Korea's e-commerce sector. Despite the dominance of major players like Naver, Coupang, and SSG, which together held only 45% of the market share in 2022, many smaller competitors are struggling to stay afloat. The situation has caused significant ripple effects; for instance, InterPark Triple, which sells travel products on these platforms, has threatened to stop its sales if payments are not made by July 25. Similarly, Yanolja, InterPark Triple’s parent company, has already ceased sales on both platforms.
The woes of Qoo10, which has been acquiring various e-commerce entities in recent years, are drawing scrutiny. Recent acquisitions include WeMakePrice in April 2023, TMON in August 2022, and Korean online shopping platform InterPark Commerce in March 2023. Additionally, Qoo10 acquired Hong Kong-based Korchina Logistics and U.S.-based Wish, as well as South Korea’s AK Mall. These strategic moves were aimed at bolstering Qoo10’s market presence and preparing for a Nasdaq IPO, but they have instead led to mounting financial and operational challenges.
Qoo10, established in 2010 as a joint venture between eBay and e-commerce pioneer Young Bae Ku, has faced growing pains as it expanded its footprint across Asia. Despite its robust backing from KKR and its early successes in markets like Singapore, Japan, and Malaysia, the company now faces the reality of a liquidity crisis fueled by its ambitious expansion strategy.
As South Korea's e-commerce sector navigates these turbulent waters, the outcome of the investigation and the financial stability of TMON and WeMakePrice will be crucial in shaping the future of the industry.
