Timon and Wemakeprice Settlement Delays Spark Widespread Concerns... Trillions in Potential Losses Feared

The settlement delay crisis that erupted at Wemakeprice, an affiliate of the e-commerce platform Qoo10, has extended to TMON and has remained unresolved for over two weeks. Among sellers, anxiety is growing, leading some to suspend sales of certain products or notify consumers of purchase cancellations for items already sold. With the summer vacation season coinciding, there are concerns about consumer damages, especially regarding travel products. Furthermore, if sales suspensions due to settlement delays continue, cash flow could be blocked, potentially causing a vicious cycle of further settlement delays. The combined monthly transaction volume of TMON and Wemakeprice is estimated to exceed 1 trillion KRW, raising concerns that this could escalate into large-scale, chain-reaction damages among sellers. Although TMON and Wemakeprice have announced the introduction of a new settlement system to support fast and secure payment to sellers and have taken steps to address the issue, market anxiety remains unresolved.

On the 24th, TMON and Wemakeprice announced that they will introduce a new settlement system in August to minimize seller attrition and customer inconvenience caused by the recent temporary settlement delays. The core of the system is to securely hold funds in connection with a third-party financial institution and support faster settlements. The companies explained that the entire payment amount will be securely protected, and the payment date will be significantly advanced, potentially enabling weekly settlements at the earliest.

This is the solution Qoo10 proposed for the settlement delay crisis that began at Wemakeprice on the 8th. Qoo10 initially stated, "Some partners experienced delays in receiving payments due to errors in the payment processing system," adding, "This was a temporary system failure that occurred during the platform upgrade process, affecting about 500 partners out of approximately 60,000 partners within Qoo10's affiliates." Qoo10 proceeded with system recovery and completed settlements for about 400 partners by the 12th, with plans to sequentially complete payments to the remaining partners by the end of July. Compensation plans for partners affected by the settlement delays were also announced.

원본보기 아이콘

However, even afterward, individual seller notifications failed to meet the promised settlement schedules, increasing seller anxiety. This also affected TMON, an affiliate company. TMON stated in a seller notice, "Due to some sellers suspending sales, the transaction volume of our products temporarily decreased," adding, "This caused difficulties in smooth settlement payments." The problem worsened as major travel agencies temporarily suspended product sales on TMON and Wemakeprice. Travel agencies plan to proceed with already sold and imminent departure products as scheduled but are monitoring the situation for further responses. It is also reported that methods such as notifying customers who made payments on TMON and Wemakeprice about purchase cancellations and encouraging repurchases through other channels are being considered. For some single products like accommodations or airline tickets, cancellations have occurred due to the unsettled payments, leading to consumer complaints flooding online communities.

The problem is that this crisis does not seem likely to be resolved quickly. TMON explained that the delay in settlement payments was due to sellers reducing or suspending sales and consumers also reducing purchases, temporarily decreasing transaction volume. This affected cash flow, causing some settlement delays. Considering the ongoing seller attrition, not only the initial problematic settlements but also future seller settlements may face difficulties. This sense of crisis has spread throughout the company, reportedly causing MDs (Merchandisers) and key promotional staff to leave.

Qoo10 Gu Young-bae President

원본보기 아이콘

Industry insiders believe that the series of aggressive acquisition strategies by Qoo10, an e-commerce company founded in Singapore by Gmarket founder Young-bae Koo, triggered the problem. Qoo10 acquired TMON in 2022, Wemakeprice and Interpark Shopping in 2023, and this year purchased the global platform Wish, recently adding AK Mall as well. Notably, Qoo10 paid $173 million (approximately 240 billion KRW) to acquire Wish. The industry views this as a strategy Qoo10 employed to increase transaction volume in preparation for the Nasdaq listing of Qxpress.

According to WiseApp, as of last month, Qoo10's expanded e-commerce subsidiaries had estimated payment amounts of 839.8 billion KRW for TMON and 308.2 billion KRW for Wemakeprice. However, the overall transaction volume did not resolve the deficits of TMON and Wemakeprice. TMON had not submitted its audit report by the April deadline, and Wemakeprice recorded an operating loss exceeding 100 billion KRW last year. Despite aggressive mergers and acquisitions to expand transaction volume, a disruption in cash flow at one point led to a breakdown of the entire system.

TMON and Wemakeprice have stated that although settlement payments may be inevitably delayed, they intend to normalize the situation as soon as possible. A TMON representative said, "All employees are working hard to normalize the situation as quickly as possible."

© The Asia Business Daily(www.asiae.co.kr). All rights reserved.