How Qoo10's buying spree led to a seller-payout crisis

Singapore-based marketplace Qoo10 has been acquiring e-commerce platforms facing a liquidity crunch, a strategy that led to a seller-payout crisis.

Qoo10 founder Ku Young-bae [TMON]

Singapore-based marketplace Qoo10 has been on a buying spree since 2022; it recently acquired the California-based e-commerce platform Wish as well as domestic players TMON, WeMakePrice and Interpark Commerce. Qoo10 founder and CEO Ku Young-bae spearheaded the aggressive purchases as a worsening liquidity crunch weighed on each property, a crunch that would culminate in the current seller-payout crisis.

Ku is a Korean entrepreneur known as the founder of the e-commerce platforms Gmarket and Qoo10.

Qoo10 took over TMON in 2022 followed by WeMakePrice and Interpark Commerce in 2023. It acquired AK Mall and U.S.-based e-commerce platform Wish earlier this year.

TMON and WeMakePrice were in a state of asset deficiency, wherein their liabilities exceeded their assets, when they were respectively acquired. TMON’s current liabilities recorded 719.3 billion won ($520 million), five times more than its current assets at 130.9 billion, as of 2022. WeMakePrice had current liabilities five times higher than its current assets as of last year. The serial buyouts aimed to boost the asset size of Qoo10 and its affiliates ahead of a planned listing of logistics subsidiary Qxpress on the Nasdaq. Ku hoped to pump in capital through the company's supposed listing. The company aimed to go public in the second half of 2024 and had already chosen Goldman Sachs as its financial adviser.

TMON and WeMakePrice's unorthodox policy under which sellers aren't paid until multiple months after a transaction is complete made matters worse. TMON sellers received their payments 40-plus days after the products or service were purchased, meaning that TMON was supposed to be paying sellers, minus fees, in July for purchases made in May.

WeMakePrice's situation isn't any better, as it pays its sellers almost three months after transactions are complete.

Industry experts cite such payment policies as the reason the two companies have been able to make it this far — as long as the total transaction amount increases every year, TMON and WeMakePrice can afford to pay their sellers.

“It’s a business model where you juggle debt using another company’s money, which resulted in a chain-reaction-like aftermath,” an e-commerce industry insider, who wished to remain anonymous, told the JoongAng Ilbo, an affiliate of the Korea JoongAng Daily.

“I don’t think Qoo10 has the ability to pay [sellers] using its capital, and Qxpress’s Nasdaq, listing too, sounds basically impossible now.”

There are also rumors that both TMON and WeMakePrice offered a variety of discount events over the last few months, asking small- to medium-sized businesses to sell more prepaid cards and gift cards, allegedly to scratch additional funds to the company.

Ku founded the e-commerce website Gmarket in 2003 and went public on the Nasdaq three years later. He sold Gmarket to eBay for 55 billion won in 2009 and agreed to a 10-year noncompete. Ku, therefore, moved to Singapore to form Qoo10 in 2010 and established Qoo10 and Qxpress in Korea only in 2019, kicking off his buying spree.

Ku recently returned to Korea and met with Qoo10 and WeMakePrice’s management teams but was not able to find a clear solution.

“The only option now seems to be for Ku to use his private funds to save the company,” an anonymous source close to TMON said.

“But looking at the current snowballing situation, that also seems tough.”

WeMakePrice co-CEO Ryu Hwa-hyeon said Thursday that the company “has enough” funds to cover consumer damages and that Qoo10 is “securing the finances for the payments.”

BY JANG JOO-YOUNG, KIM KYUNG-MI [cho.yongjun1@joongang.co.kr]