In Need of Adequate E-commerce Regulations

In May 2023, Qoo10, the parent company of e-commerce platforms TMON and WeMakePrice, increased its settlement cycle from one week to two months. At the same time, TMON was eagerly selling 10 percent off gift cards. However, their payment agency doubted the TMON’s financial soundness and halted payments. Both platforms operated in a so-called “robbing Peter to pay Paul” strategy in which the payment originally earmarked for July’s product sales was given to the stores as May’s settlement. As a result, when payment was suspended by the agency, the settlement could not be paid. These circumstances were disclosed as the stores that did not receive settlement canceled customer orders.

Koo Young-bae, CEO of Qoo10, admitted during emergency questioning by the National Assembly on July 30, that he misappropriated some of TMON’s sales when he took over Wish, an American e-commerce platform. Small and medium-sized e-commerce platforms such as TMON and WeMakePrice, not subject to South Korea’s large-scale distribution industry development act, are unbound by its sales price settlement standards. Raising the sales price for 70 days and using the money will present no immediate problem for these entities.

The reason for the TMON and WeMakePrice crisis was the lack of regulations on the storage practices and use of e-commerce platforms. Insufficient regulations resulted in losses to consumers. To prevent this from happening again, we need to set regulations that are suitable for e-commerce markets, which continue to grow and change. It is time to seriously consider what positions we should take regarding our economic activities.

By Kim Hyun-young, Freshman,
Dept. of Faculty of Business Administration