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Recently, TMON and Weimeipu, two Korean e-commerce platforms with a combined monthly user base of more than 8.6 million, have run into serious financial difficulties and are unable to settle payments for goods sold to merchants on their platforms on schedule. Industry insiders predict that the scale of merchant losses will exceed 100 billion won (1 RMB is approximately 190 won), and many small and medium-sized tourism companies will face bankruptcy. More seriously, the rapid growth of Korean e-commerce in recent years has shown signs of a bubble bursting.

According to statistics, the scale of e-commerce in South Korea reached 227 trillion won last year, achieving a 10-fold explosive growth in just 13 years, but the vicious competition among e-commerce platforms is also intensifying. Relevant experts predict that in the increasingly cruel competition, the bubble burst crisis will first appear on the e-commerce platforms ranked lower. At the beginning of last year, VOGO, a live broadcast platform in South Korea that mainly sells ultra-low-priced goods, fell into financial difficulties and was unable to pay for sales. At that time, 615 merchants suffered a total loss of 33.6 billion won, but other e-commerce platforms did not pay enough attention to this situation.

Starting from the evening of July 23, credit card settlement and refunds on the two platforms, TMON and Weimeipu, were all interrupted. It is understood that the two platforms have not paid sales proceeds to merchants for more than one month. Kookmin Bank of Korea and SC First Bank originally provided short-term loan services to merchants on the two platforms, which was equivalent to prepaying sales proceeds and repaying the banks after the platforms paid the merchants. As TMON and Weimeipu have run out of cash flow, in order to prevent future bad debt risks, the two banks have suspended this loan business on July 24.

South Korean tourism companies were hit hardest by the incident. The unpaid payments for tourism products on TMON and Weimeipu alone exceeded 100 billion won. It is estimated that the company with the largest loss in accounts receivable is Hana Tour, the top-ranked tourism company in South Korea, with an amount of 8 billion won, followed by Modetour with 6 billion won. The losses of companies such as Yellow Balloon are also in the billions of won. However, the current statistics only include accounts receivable from June to July. If the accounts receivable for tourism products issued in August are still not received, the scale of losses will further increase by 20% to 30%. Especially for some small and medium-sized tourism companies, if they cannot properly resolve the arrears of accounts receivable on the two platforms, they are very likely to face the risk of bankruptcy and closure.

Some people believe that this incident stems from the blind business expansion of Q10 Group. Q10 Group, founded by Gu Yongpei, the founder of Korean e-commerce platform Gmarket, has successively acquired Korean e-commerce platforms such as TMON, Interpark Commerce, Weimeipu, and AK Mall. During this process, most of Q10's transactions were conducted through stock swaps, with the purpose of bundling multiple companies to expand their scale and promote the listing of the group's logistics subsidiary Q-Express on the Nasdaq in the United States. However, the listing of Q-Express has not progressed, resulting in a break in the capital chain of TMON and Weimeipu.

Although Gu Yongpei promised to repay the debt, the company currently has only 200 to 300 million won in cash. According to company employees, Gu Yongpei is currently out of contact. With the collapse of trust in the two platforms, merchants have stopped selling and consumers are avoiding purchases, and the situation is continuing to deteriorate.

This incident has profoundly exposed the hidden crisis of South Korea's e-commerce industry. Most of South Korea's e-commerce platforms are in a loss-making state. After Gmarket was acquired by Shinsegae Group for 3.4 trillion won in 2021, it has been in deficit every year; SSG.com, which also belongs to the group, has also been losing money year after year after it was spun off and became independent in 2018.

Lotte Shopping's e-shopping platform Lotte on announced voluntary resignations to employees last month, reflecting the crisis facing corporate management. Lotte on's operating loss last year was 85.6 billion won, and since its establishment in 2020, it has lost about 100 billion won every year.

11th Street, known as the first generation of e-commerce companies in Korea, decided to move its headquarters from Seoul Plaza in front of Seoul Station to Gwangmyeong City, Gyeonggi Province in September this year to save costs. In 2018, 11th Street received 500 billion won in investment under the condition of "IPO within 5 years", but due to deteriorating profitability, it has not been listed so far, and has been in deficit for four consecutive years since 2020.

Some experts believe that the recent competition among Korean e-commerce platforms for logistics and distribution services requires huge capital investment, so e-commerce platforms that lack capital support will gradually be squeezed out of the market. Industry insiders predict that in the future, the Korean e-commerce market will gradually form a strong dialogue between Coupang, the largest e-commerce platform in Korea, which has an advantage in distribution, and Aliexpress, Temu and other overseas e-commerce platforms in Korea that have an advantage in price. (Yang Ming, Economic Daily reporter in Seoul)