Two of Qoo10’s Korean e-commerce subsidiaries, TMON and WeMakePrice, filed for court receivership on Monday with the Seoul Bankruptcy Court. South Korean government officials have estimated that, together, both companies owe at least 213.4 billion won (US$154.2 million) to over 2,700 merchants who have not received their May payments. This has also led to irate consumers appearing at the Seoul offices of both platforms, demanding refunds.
The amounts owed could snowball when June and July payments become due, with the total value speculated at up to 1 trillion won (US$722 billion).
The Seoul Central District Prosecutors Office has started anti-corruption investigations on the head executives of TMON and WeMakePrice, as well as Qoo10 CEO and founder Ku Young-bae, and the South Korean government has earmarked 560 billion won (US$445.07 million) to support small vendors and credit and travel agencies affected by these payment delays.
Founder Ku Young-bae has appeared at a parliamentary hearing, where he vowed to “offer everything I own” to help redress the payout delays, but he also admitted that “there is no money within the company.”
With both companies now in receivership, it could take months for the thousands of small vendors to claim the money owed to them, if ever, and the repercussions of this crisis is already reverberating through the South Korean Economy.
Qoo10’s aggressive acquisition campaign backfires
Qoo10 was founded by Chief Executive Ku Young-bae in Singapore in 2010 as a joint venture with eBay, and opened e-commerce platforms in Singapore, Japan, Indonesia, Malaysia, China and Hong Kong, with its Japanese business fully acquired by eBay in 2018.
From 2018, Qoo10 began an aggressive acquisition spree to purchase other e-commerce platforms, buying Shopclues in India in 2019, South Korean companies TMON in 2022, Interpark and WeMakePrice in 2023, and US-based Wish and AK Mall in 2024. Wish was acquired for US$166 million.
Business Korea has been tracking Qoo10 Group since 18 July 2024, when it reported that the Group was pushing for a merger of its e-commerce subsidiaries, TMON, WeMakePrice, and Qoo10, to streamline operations and address financial inefficiencies. By the end of 2023, TMON had liabilities of 719.3 billion won (US$519 million), while WeMakePrice liabilities were 309.9 billion won (US$223 million) at the end of 2023.
Qoo10 filed its last annual returns in 2021 when it posted a cumulative loss of S$418 million.
AJU Press reports an allegation that Qoo10 misappropriated funds from the two e-commerce platforms to improve the financial condition of Qxpress, the Singapore logistics unit that the group intends to list on the NASDAQ. If this proves true, it could mean that CEO Ku could be charged with criminal breach of trust for running a Ponzi scheme.
Feature Image: Yonhap News
See Also: Former ecommerce giant Wish sold to Singapore’s Qoo10 for less than 1% of its peak value