“The nature of the online platform business is that it could die quickly and then make a comeback. If you’re convincing enough, opportunities can open up again.”
Ku Young-bae, the founder and CEO of Singapore-based Qoo10, pledged to offer “everything I have” to address payment delays at e-commerce platforms TMON and WeMakePrice during a National Assembly hearing on July 29. TMON and WeMakePrice are facing a severe liquidity crisis and have filed for corporate rehabilitation.
Ku made his public appearance 22 days after payment delays at the two platforms first rocked the e-commerce sector. Sellers who did not receive payment from TMON and WeMakePrice had hoped that Ku, who had remained silent since the payment delay crisis broke, would propose measures to address the situation.
But Ku failed even to grasp the scale of the damage, let alone offer a solution. Regarding allegations of excessive discounting of gift certificates and long settlement cycles, which diverted sales proceeds to fund acquisitions, he responded with vague statements, claiming that “e-commerce companies have been doing this for over a decade” and that “we aimed to go global to solve this structural problem and grow the market.”
TMON and WeMakePrice excessively issued discount coupons and sold gift certificates at drastically reduced prices to generate quick cash, according to industry insiders on July 31. Both companies operated a so-called “robbing Peter to pay Paul” scheme, paying sellers two months after the consumer paid for the goods.
Trouble arose when some of the sales proceeds were diverted to fund the operations of their parent company, Qoo10. The Financial Supervisory Service estimated that the unpaid bills for May add up to at least 210 billion won ($152 million). The figure is expected to rise to 1 trillion won after adding unsettled payments from June onwards.
Qoo10′s liquidity crisis stems from aggressively acquiring several insolvent e-commerce companies to inflate the transaction volume of its logistics subsidiary, Qxpress, in preparation for a Nasdaq listing, according to sources familiar with the matter. Qoo10 acquired TMON, Interpark Commerce, WeMakePrice, AK Mall and U.S. e-commerce platform Wish between 2022 and 2023. Most acquisitions were made in exchange for Qoo10 shares, but some platforms were purchased with cash, partly funded by an unusual structure that allowed the headquarters to use subsidiary funds.
After acquiring TMON and WeMakePrice, Qoo10 absorbed and integrated the two companies’ development and financial operations into its IT subsidiary, Qoo10 Technology. The sales revenue from these platforms was then used to fund the headquarters’ operations. Qoo10 drew on TMON and WeMakePrice’s sales proceeds to fund the acquisition of Wish last February.
“We acquired Wish for 230 billion won, but the actual cost was 40 billion won,” Ku admitted, adding, “We temporarily borrowed that part by mobilizing TMON and WeMakePrice funds and repaid it within a month.”
The repayment was made using Wish’s reserves, following internal procedures such as board approvals, and had nothing to do with delayed payments to sellers, according to Ku.
But the Seoul Central District Prosecutors’ Office’s Anti-Corruption Investigation Division 1 is considering embezzlement charges against Ku if it is confirmed that he used the sales proceeds of TMON and WeMakePrice for other purposes. The Ministry of Justice has imposed travel bans on TMON CEO Ryu Gwang-jin and Wimef CEO Ryu Hwa-hyun.
“The maximum amount of funding Qoo10 can mobilize at this point is 80 billion won,” said Ku. “But I’m not sure if we would be able to tap into it immediately.”
