Overdue settlements for vendors on ecommerce platforms Tmon and WeMakePrice have surged to 1.3 trillion won ($978 million) in total, impacting over 48,000 businesses, according to data released by the government on Sunday.
The final figures showed the two struggling online marketplaces owned by Singapore-based Qoo10 owe a total of 1.3 trillion won to their vendors, surpassing the government’s initial forecast of 1 trillion won. The figure also marks a jump of over 400 billion won from the tentative figure of 818.8 billion won on Aug. 19.
The liquidity crunch has hit 48,124 businesses on the platforms. While 43,493 vendors are owed less than 10 million won each, 981 vendors are owed more than 100 million won each, accounting for 88.1 percent of the total unsettled payment volume.
Of the delayed amount, payments for digital and home appliances comprise the largest portion of 29 percent, while 25.2 percent is for gift cards, 10 percent for food products, 8.8 percent for general goods and cultural services, 6.3 percent for fashion goods and 6.2 percent for travel-related products.
While most of the impacted vendors were located in South Korea, especially the Seoul metropolitan area, 772 vendors were based overseas. The delayed payments for overseas vendors stood at 6.6 billion won.
At a pangovernmental meeting Friday, related authorities vowed to promptly execute a budget of 1.6 trillion won that has been drawn up to support affected vendors.
According to the announcement, of that 1.6 trillion won, some 35 billion won had been executed as of Wednesday. The government will also look into bringing down the interest rates on loans to lessen the burden on merchants.
To prevent similar incidents, the government pledged to look into regulations related to the e-commerce industry, revising the Act on Fair Transactions in Large Retail Business and the Electronic Financial Transactions Act.
Key measures under consideration include enforcing shorter settlement periods than the current 40 to 60 days stipulated for large-scale retailers and requiring them to separately manage settlement amounts for vendors. A final plan is expected to be announced by the end of the month.
Meanwhile, Tmon announced Friday it has executed an organizational reshuffle, launching a division to manage its finances and expanding its legal affairs team to strengthen compliance.
Tmon said it would incorporate escrow functionalities into its existing payment system, which would enable a third party to temporarily hold money until a transaction has successfully wrapped up. The settlement period will be shortened as well, to no more than three days.
“We are looking into diverse ways to normalize the company, such as attracting investments and securing assets,” Tmon CEO Ryu Kwang-jin said. “Through the reshuffle, we will work to recover trust and to establish a foothold for long-term growth.”
The court approved Interpark Commerce, another e-commerce subsidiary under the wings of the troubled Qoo10, to undergo an autonomous debt-restructuring program on Friday, following the path of Tmon and WeMakePrice.
“The focus is on minimizing the number of affected vendors and the size of the damage,” Interpark Commerce CEO Kim Dong-sik said. “The sales procedure (of Interpark Commerce) is underway, and we will put in all efforts for a better outcome.”
Under the debt-reshuffling procedure, the platforms can negotiate debt repayment with vendors for a month before being subject to court receivership.
