Online commerce woes Korea's e-commerce sector requires sound governance, stricter management After several weeks of crisis caused by delayed payments on Qoo10's two e-commerce platforms, TMON and WeMakePrice, both the Korean government and the founder of the Singapore-based company took action on Monday to address and reduce the damage. On Tuesday, Ku Young-bae, founder of the Singapore-based Qoo10, appeared before the parliamentary National Policy Committee, apologizing and pledging to use all of his resources to resolve the delayed payments. His belated appearance and in-person apology should have come sooner. His apology, issued in a statement a day earlier, was called into question when TMON and WeMakePrice filed for court receivership just a few hours later. Authorities and company officials estimate some 210 billion won ($152 million) in delayed payments, and the figure will likely continue to grow to 300 million won when June and July's figures are factored in. TMON and WeMakePrice, currently ra nk as the fourth and fifth- largest e-commerce platforms in the nation. Together, the two platforms support approximately 60,000 domestic vendors and serve around 8.6 million customers. The crisis came to light earlier this month when vendors at WeMakePrice raised questions about missed payments for the month of May. The payment delays then extended to TMON, affecting travel agencies and travel packages sold during the peak holiday season. Customers rushed en masse to get refunds, but only achieved partial success. The severity of the crisis led the government to offer 560 billion won ($445 million) in support on Monday, while reiterating the need for Qoo10 and its e-commerce platforms to be held accountable. This aid includes 200 billion won in funds from public institutions to help small merchants and 300 billion won in credit guarantee funds. The government has also pressured payment firms to assist customers with cancellations and refunds. In addition, the government announced it would investigate the involved companies to determine if they violated Korea's e-commerce laws. President Yoon Suk Yeol emphasized, Tuesday, that the case should be "handled thoroughly according to the law." Authorities are urged to act decisively, as prosecutors have already imposed travel bans on Ku and other executives from the two e-commerce firms. Once the immediate crisis is resolved, the government's lax governance over the growing e-commerce sector will need to be revisited. A similar e-commerce crisis occurred in Korea in 2021 when the online discount app Mergepoint abruptly halted Mergemony's circulation, causing significant disruptions for customers. At that time, the government faced criticism for failing to adequately revise laws related to online commerce. Officials at the presidential office said the government will consider revising penalties for e-commerce firms in cases of payment settlement issues. It is indeed timely, as e-commerce has evolved rapidly in Korea. To ensure their long-term sustainability and safeguard their partners and customers, companies in this sector need to implement more robust operations and improve management practices. The use of funds within TMON and WeMakePrice should be thoroughly investigated. Ku explained to the committee that funds from these firms were used to acquire the North America-based e-commerce platform Wish for $173 million this year, but were repaid within one month. Since founding Qoo10 in Singapore in 2010, Ku acquired TMON in 2022, followed by Interpark Commerce and WeMakePrice the next year. The aggressive expansion of the Singapore-based firm in recent years, along with its management of vendor payments and customer refund policies, points to a need for a general overhaul of e-commerce sector. Source: Yonhap News Agency