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South Korea’s e-commerce sector, renowned for its size and dynamism, is experiencing significant turmoil. On Thursday, the South Korean Fair Trade Commission (KFTC) initiated an investigation into two prominent e-commerce platforms, Ticket Monster (TMON) and WeMakePrice, both of which are owned by Qoo10. The investigation centers on allegations that these platforms have failed to pay approximately 60,000 merchants, who are collectively owed about $123 million (170 billion KRW).
The financial instability at TMON and WeMakePrice has led to broader repercussions. Both companies are currently grappling with severe liquidity issues, which have resulted in the suspension of consumer refunds. Additionally, local banks have paused loan services to these platforms due to delays in payments, further compounding their financial difficulties.
This crisis highlights the precarious nature of South Korea’s competitive e-commerce market. Despite its significant size, the market is fragmented, with major players like Naver, Coupang, and SSG controlling only 45% of the market share as of 2022. The remaining market is fiercely contested by numerous smaller players, many of whom are struggling to achieve profitability and are incurring losses.
The impact of Qoo10’s financial woes has been swift and severe. InterPark Triple, a seller of travel products on the affected platforms, announced that it would halt operations if not compensated by July 25. Yanolja, the parent company of InterPark Triple, confirmed that it has already ceased selling on both TMON and WeMakePrice, citing non-payment as the reason.
The crisis appears to stem from Qoo10’s aggressive expansion strategy, which involved several high-profile acquisitions in recent years. These include the purchase of WeMakePrice in April 2023, TMON in August 2022, InterPark Commerce in March 2023, and Hong Kong-based Korchina Logistics through its logistics unit, Qxpress. Earlier in the year, Qoo10 also acquired the U.S.-based e-commerce platform Wish and South Korean e-commerce company AK Mall. While these acquisitions were intended to bolster Qoo10’s market presence and support its planned initial public offering on Nasdaq, they have instead introduced significant financial and operational challenges.
As the investigation unfolds and the financial strain continues, the future of TMON, WeMakePrice, and their parent company Qoo10 remains uncertain. The situation underscores the volatile and competitive landscape of South Korea’s e-commerce market, where rapid growth and aggressive strategies can quickly lead to severe financial repercussions.
