The e-commerce market in South Korea ranks as one of the largest in the world, but it’s also proving to be a precarious one. On Thursday, South Korea’s Fair Trade Commission announced that it had launched an investigation into two major South Korean e-commerce platforms owned by Qoo10 — Ticket Monster (TMON) and WeMakePrice — for failing to pay out funds to merchants.
South Korean officials said that some 60,000 merchants are collectively owed $123 million (170 billion KRW). Both companies have cash liquidity problems, so to shore up operations, they have also stopped issuing refunds to consumers. Meanwhile, South Korean banks have also temporarily halted loan services to TMON and WeMakePrice, due to payment delays, according to local media reports.
The situation underscores the delicate and competitive state of the market in the country. Naver, Coupang, and SSG currently are the largest players in the country’s e-commerce market, but together as of 2022, they accounted for a market share of only 45%. In a business where profitability is highly dependent on economies of scale, there are many others duking it out for even smaller market shares, and many of these have been struggling and making losses.
The ecosystem effect has been swift for Qoo10. InterPark Triple, which sells travel products on the platforms, said it would cease to do so if not paid by today, July 25. Yanolja, InterPark Triple’s parent, said in an emailed statement that it has stopped selling on both platforms already.
Qoo10, TMON and WeMakePrice did not immediately respond to a TechCrunch request for comment.
Local media are pointing the finger at Qoo10 — specifically at a series of acquisitions that the parent company made over the last few years, often of underperforming e-commerce platforms. In addition to acquiring WeMakePrice in April 2023, and TMON in August 2022, it picked up Korean online shopping platform InterPark Commerce (not the same as InterPark Triple) in March 2023 and Hong Kong-based Korchina Logistics via its logistics unit Qxpress. Earlier this year, Qoo10 also acquired Wish, the U.S.-based e-commerce platform, and AK Mall, an e-commerce company in South Korea.
These acquisitions were part of Qoo10’s expansion strategy, aiming to strengthen its market presence and prepare for an initial public offering on Nasdaq in the U.S. However, they also brought about financial burdens and operational challenges, leading to the current liquidity crisis.
Founded in 2010, Qoo10 is a Singapore-headquartered joint venture firm formed by the U.S. e-commerce company eBay and Gmarket founder Young Bae Ku, a storied e-commerce mogul in South Korea. It’s currently backed by KKR, among others.
Ku founded Gmarket in 2000 in South Korea and expanded its business into Japan in 2007 and Singapore in 2008. After Ku sold Gmarket’s South Korean unit to eBay in 2009, Gmarket rebranded as Qoo10 in 2012 and penetrated other Asian markets, including Singapore, Japan, Indonesia, Malaysia, China, Hong Kong, and India. (Gmarket listed in the U.S. via American Depositary Shares in 2006.) In 2018, eBay acquired Giosis’ business, including Qoo10’s Japanese unit, for $573 million.
