Qoo10’s TMON and WeMakePrice Face Problems in the South Korean Market

TMON & WeMakePrice Face Liquidity Problems: Key Insights 

• Refund Suspension: Due to severe liquidity issues, TMON and WeMakePrice have halted refunds in the South Korea's eCommerce market.

• Acquisition Strategy Strains: Qoo10's push to expand its market presence and prepare for a Nasdaq IPO through aggressive acquisitions has led to major financial and operational challenges.

• Seeking Financial Aid: To address a US$122.8 million debt crisis, Qoo10 is looking to secure US$50 million from its U.S. affiliate Wish, while local payment operators and the government offer support to affected customers and small business owners.

The South Korean eCommerce market, the fourth largest globally, is experiencing turbulence. South Korea's Fair Trade Commission recently announced an investigation into two major eCommerce platforms, Ticket Monster (TMON) and WeMakePrice, both owned by Singapore-based Qoo10. 

The platforms are accused of withholding US$123 million owed to around 60,000 merchants.

Refund Issues of TMON and WeMakePrice 

Both TMON and WeMakePrice are grappling with liquidity issues. As a result, they have halted refunds to consumers. Local banks have also suspended loan services to these platforms due to delayed payments, according to media reports.

• The South Korean eCommerce market is dominated by coupang.com, ssg.com, and nike.com.

• By 2023, these stores accounted for two thirds (66.8%) of the market share of the top 100 stores in the South Korean eCommerce market.

• With 2023 net sales of US$21.1 billion, coupang.com is in a league of its own.

Qoo10: Financial Challenges 

The crisis has had immediate effects. InterPark Triple, which sells travel products on TMON and WeMakePrice, threatened to cease operations if payments were not made by July 25, 2024. Its parent company, Yanolja, has already stopped selling on both platforms. 

Qoo10, which has been aggressively expanding through acquisitions, including TMON and WeMakePrice, is at the center of the controversy. These acquisitions aimed to bolster Qoo10's market presence and prepare for a Nasdaq IPO. However, they have also led to financial strain and operational challenges.

Funding Efforts & Market Response 

In response to the crisis, Qoo10 is reportedly seeking US$50 million from its U.S. affiliate, Wish, acquired in February 2024. However, authorities doubt this will suffice to resolve the issues. The value of delayed payments is estimated at US$122.8 million, with TMON and WeMakePrice owing US$79.2 million and US$40.8 million, respectively.

Amid the crisis, local payment service operators like Naver Financial, Kakao Pay, and Toss have stepped in to compensate affected customers. The government is also considering support measures for small business owners impacted by the situation.

Qoo10 CEO Ku Young-bae has remained largely silent. He recently resigned from his role as CEO of Qxpress, a logistics provider under Qoo10, to distance himself from the crisis.

Sources: TechCrunch, The Korea Herald, ECDB