Qoo10 Settlement Delays Since March Last Year...The Starting Point of Tmon and Wemakeprice Refund Wars [Business & Issues]

Settlement Delays Begin at Singapore Headquarters
Forced Acquisitions of Capital-Deficit Companies
Suspicions of Circular Payments... Is a Crisis Imminent?

On the 25th, victims who were unable to receive refunds due to delayed settlements protested by entering the building inside TMON's new office in Sinsa-dong, Gangnam-gu, Seoul.
[Image source=Yonhap News]

As the damage caused by delayed payment settlements by domestic e-commerce companies TMON and WEMAKEPRICE snowballs, it has been revealed that the Singapore headquarters of their parent company Qoo10 also began experiencing settlement delays starting from March last year. While liquidity issues had already emerged, the company focused solely on aggressive mergers and acquisitions (M&A) to expand its scale, leading to the current crisis. There are even suspicions that Qoo10, facing financial difficulties, may have been using the sales proceeds from each platform to cover payments elsewhere. If Qoo10 were to go bankrupt, TMON and WEMAKEPRICE could collapse in succession, potentially causing damages exceeding 1 trillion KRW domestically.

Settlement delays began at Qoo10’s Singapore headquarters... dismissed as "network issues"

Koo Young-bae, CEO of Qoo10

According to Singaporean local media The Straits Times, Qoo10’s settlement delays started at its Singapore headquarters in March last year. Qoo10’s Singapore headquarters originally contracts to deposit settlement funds into sellers’ accounts within two business days after sales, excluding commissions, but some sellers did not receive their settlement payments for one to two months, sparking controversy.

The Straits Times reported that settlements for about 9 to 10 sellers were delayed at that time, with the amount affected averaging 3,000 to 4,000 Singapore dollars (approximately 3.08 million to 4.11 million KRW) per person. However, Qoo10 responded by saying, "There are technical issues related to global market expansion and integration between Asian markets," and "The problem arose during the integration of payment systems across service platforms in different countries and will be addressed soon," offering no detailed explanation beyond attributing it to technical problems.

After sellers who suffered damages threatened to file lawsuits and some began terminating transactions with Qoo10, the company sequentially paid the settlement amounts from April last year, resolving the controversy at the Singapore headquarters for the time being. Since the scale of delayed settlements was small at that time, the issue was quickly contained, but suspicions have been raised that liquidity problems had already begun then.

TMON, WEMAKEPRICE, and others aggressively acquired despite capital erosion

The first quarter of last year, when Qoo10’s settlement delays began, was also when M&A expansion was in full swing. Originally, Qoo10 was an e-commerce platform established in 2010 by CEO Koo Young-bae as a joint venture investment with eBay. CEO Koo, the founder of Gmarket, sold Gmarket to eBay in 2009 and then established Qoo10 based in Singapore, subsequently expanding business mainly in Southeast Asian markets such as Singapore, Indonesia, and Malaysia.

When selling Gmarket, eBay required a non-compete clause in the Korean market for 10 years, so CEO Koo established Qoo10 in Singapore. After the non-compete period ended around 2019, CEO Koo re-entered the Korean market and began aggressive M&A expansion. In September 2022, he acquired TMON, followed by Interpark Commerce in March 2023, and WEMAKEPRICE the very next month. In February this year, he acquired the U.S. online shopping platform Wish, and in March, AK Mall, acquiring multiple e-commerce platforms in a short period.

However, with Qoo10 being an unlisted company in Singapore with opaque management and financial status, the liquidity crisis worsened as it continued acquiring companies like TMON and WEMAKEPRICE, which were already suffering from significant capital erosion. TMON has been in a capital deficit since 2017, with current assets of 130.9 billion KRW and current liabilities reaching 719.3 billion KRW in 2022. Its audit report was overdue last year and still has not been disclosed. WEMAKEPRICE’s current liabilities stood at 309.8 billion KRW at the end of last year, five times its current assets of 61.7 billion KRW.

Suspicions of using sales proceeds to cover payments spread... fears of chain bankruptcies due to liquidity crisis

Some suspect that Qoo10 used the sales proceeds from subsidiaries like TMON and WEMAKEPRICE as funds for M&A, a so-called 'cover-up' scheme. Earlier this year, TMON changed its settlement period from "within one week after sale" to "within 40 days," and WEMAKEPRICE changed it to "60 days." Since acquisitions of Wish and AK Mall occurred after these settlement period changes, suspicions have arisen that Qoo10 may have diverted some settlement funds to finance acquisitions.

Although Korean law does not specifically regulate the settlement period after sales for e-commerce companies, the industry viewed TMON and WEMAKEPRICE’s settlement period changes as unusual. Platforms like Gmarket, Auction, and Naver settle payments the day after sales, so delaying settlement dates was considered abnormal.

If the cover-up suspicions prove true, Qoo10’s bankruptcy risk will increase. Should Qoo10 go bankrupt, damages from TMON and WEMAKEPRICE alone could exceed 1 trillion KRW. Last month’s estimated transaction volumes for the two companies were 839.8 billion KRW for TMON and 308.2 billion KRW for WEMAKEPRICE.

Earlier, a staff memo found at TMON’s headquarters drew attention by hinting at the scale of damages. The memo included notes such as "500 billion to 700 billion KRW (TMON) + expected over 1 trillion KRW," as well as "lack of control tower, judged difficult to normalize, considering corporate rehabilitation." It suggested that TMON’s unsettled payments alone ranged from 500 billion to 700 billion KRW, and when combined with parent company Qoo10, Wish, WEMAKEPRICE, and other affiliates, damages were expected to exceed 1 trillion KRW.