Timonet Expands with Coupons, Damage Scale Also Grows

It has been revealed that TMON and WEMAKEPRICE increased their users through various promotions in the first half of this year, resulting in uncontrollable growth in damages. To fund Qoo10's acquisition of Wish, they had to expand transaction volumes, and in a market environment where Coupang's dominance and the offensive of Chinese e-commerce (C-commerce) were challenging, the reckless expansion of users ultimately became the root cause of the problem.

On the 6th, data company IGAWorks reported that according to Mobile Index, the monthly active users (MAU) of TMON and WEMAKEPRICE (TMEP) were 4.07 million and 4.06 million respectively in June, before the settlement delay incident occurred. Simply calculated, the combined users of both companies reached 8.13 million. This was the highest figure in the past year, with nearly 1 million more users compared to the same period last year.

What stands out is the growth trend this year. In the case of TMON, users steadily increased from the end of last year, reaching the 3.4 million range early this year, and then surpassed 4 million at once in April. This scale was maintained until July, when the settlement delay incident occurred. WEMAKEPRICE also stayed in the 3 million range but suddenly increased by nearly 700,000 users in March and continued an upward trend thereafter. It was not just the number of users that increased. In June, the estimated card payment amounts for TMON and WEMAKEPRICE were 467.58 billion KRW and 191.3 billion KRW respectively. The total was 658.88 billion KRW. Payment amounts steadily increased this year, peaking in June.

Ryu Kwang-jin, CEO of TMON, is attending a hearing held at the Seoul Rehabilitation Court in Seocho-gu, Seoul on the 2nd. The court plans to review the reasons for the rehabilitation applications of TMON and WEMAKEPRICE, their debt status, and funding plans. Photo by Jo Yong-jun jun21@

원본보기 아이콘

The industry evaluates this as an unusual growth amid the dominance of Coupang and Naver. Moreover, the first half of this year was also a period of intense Korean market penetration by Chinese e-commerce (C-commerce) platforms such as AliExpress and Temu. According to WiseApp, the MAUs of AliExpress and Temu in July were 8.47 million and 7.55 million respectively. Combined, this is 16.02 million, a 236% increase compared to the same month last year. The estimated cumulative payment amount from January to July for AliExpress and Temu was 2.2938 trillion KRW, approaching last year's total estimated payment amount of 2.3227 trillion KRW.

Although the market conditions were not favorable for TMEP, the reason users increased was due to aggressive discount campaigns such as coupons. To secure funds for Qoo10's acquisition of Wish, they had to expand transaction volumes, and in a challenging environment, there was no better option than drastic discount policies. During this period, it became widely known among consumers that if you wanted to buy cheaply, you had to search on TMEP. One affected seller said, "From April, products sold on TMON had reverse-margin coupons attached, causing sales to increase sharply." The sales proceeds were used for this promotion, which triggered the current incident.

Promotions aimed at expanding users ultimately increased the scale of damages. According to the task force of related government departments regarding the WEMAKEPRICE and TMON incident, as of the 31st of last month, the unpaid settlement amount for TMEP was 274.5 billion KRW, and including transactions from June to July with approaching settlement deadlines, it is expected to grow more than threefold.

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