Qoo10 Group CEO Ku Young-bae, a pioneer in South Korea’s e-commerce, now faces the unraveling of his success saga.
After rapidly rising to the fourth position in the domestic e-commerce market through the acquisitions of TMON, WeMakePrice, and Interpark Commerce, delays in payments to sellers at TMON and WeMakePrice have caused widespread issues affecting consumers, retailers, and financial sectors.
The travel industry alone is estimated to have suffered losses exceeding 100 billion won, with fears of potential chain bankruptcies among small and medium-sized businesses that have not received payments.
Industry analysts suggest that Qoo10′s liquidity crisis stems from acquiring underperforming platforms to list its logistics subsidiary Qxpress on Nasdaq, despite lacking financial strength.
Attention is now focused on Ku’s crisis management abilities, as he has yet to present a clear solution.
After graduating from Seoul National University, Koo joined a U.S. oil development company before entering the e-commerce field in 1999 by joining Interpark under then-CEO Lee Ki-hyung (now CEO of Gradiant).
The following year, Ku launched Goodsdaq, a venture applying Auction’s auction model, but it yielded limited results. In 2003, he rebranded it as Gmarket, introducing the open market model and achieving rapid growth.
The open market is an online marketplace where goods can be traded freely, a novel e-commerce method at the time. Gmarket’s transactions surged from 10,000 in 2004 to 600,000 in 2005, with annual transaction volume surpassing 1 trillion won, making it Korea’s top e-commerce platform, surpassing Auction.
Gmarket was listed on Nasdaq in 2004 and sold to eBay for 550 billion won in 2009, earning Ku 71.5 billion won from his Gmarket shares.
Under a non-compete clause, Ku moved to Singapore in 2010 and established Qoo10 in a joint venture with eBay. During his tenure at an oil company, he married a local aristocrat he met while working in India. Expanding into Southeast Asia, he acquired the Indian open market ShopClues.
In 2019, after the non-compete clause expired, Ku established Qxpress’s Korean branch. By 2022, he expanded his business by acquiring five platforms, starting with TMON, followed by Interpark Commerce, WeMakePrice, the U.S. shopping platform Wish, and AK Mall.
He enlisted close associates to help manage the acquisitions. Ryu Kwang-jin, who had worked with him during Gmarket’s peak, took charge of TMON, while Kim Hyo-jong, a former Qoo10 executive, managed WeMakePrice. Kim resigned from WeMakePrice at the end of last year, and Ryu Hwa-hyeon, a former WeMakePrice executive, now leads the company.
Ku acquired these platforms to increase the logistics volume of his subsidiary, Qxpress, and prepare for a Nasdaq listing. He was able to acquire control of TMON and WeMakePrice without spending any cash due to this ambitious plan. Ku acquired these platforms in exchange for Qxpress shares.
His strategy initially seemed successful. Shortly after acquiring TMON and WeMakePrice, Qxpress’s Korean revenue increased by about 10% in 2023.
However, acquiring these chronically unprofitable companies became problematic. TMON and WeMakePrice, already financially distressed before the acquisitions, saw their situation worsen under Qoo10. WeMakePrice’s operating loss surged 84% to 102.5 billion won last year, and TMON failed to submit its audit report this year. The combined capital of both companies is now estimated at minus 900 billion won.
TMON and WeMakePrice have recently offered frequent discounts on pre-ordered credits, including TMON vouchers and gift cards. This has raised suspicions that they are using extended payment cycles to manage cash flow, potentially engaging in debt recycling. Many sellers have reported payment delays, and the fallout is now affecting consumers as well.
