Online shopping sales slow amid e-commerce platforms’ payment delays

Industry

Online shopping sales slow amid e-commerce platforms’ payment delays

Published: 02 Sep. 2024, 18:35 Updated: 02 Sep. 2024, 19:59

KIM JU-YEON
kim.juyeon2@joongang.co.kr

Customers of Happymoney gift cards demand refunds in front of the Financial Supervisory Service's offices in Yeongdeungpo District, western Seoul, on Aug. 2 after the vouchers became non-refundable and largely unusable due to e-commerce platforms TMON and WeMakePrice's liquidity crises. [NEWS1]

Korea's online shopping sales grew at the slowest rate yet in July as the delay in payments from major e-commerce platforms and extreme heat dampened consumption, Statistics Korea said Monday.

E-coupons — which include gift cards that have become non-refundable and mostly unusable due to the fallout from Qoo10-owned TMON and WeMakePrice’s liquidity crises — took a notable hit, while demand for food delivery services reached a record high.

Online shopping transactions amounted to 19.96 trillion won ($15.14 billion) in July, up 5.4 percent on year, the statistics agency said in its monthly e-commerce industry report.

It marked the smallest on-year growth since the agency first compiled the data in January 2017.

Groceries, food delivery services and daily necessities drove the overall growth for online markets, according to Statistics Korea.

Food and beverage sales, which accounted for the largest volume among e-commerce purchases, grew 14.6 percent to 2.84 trillion won. Food delivery went up 8.9 percent to 2.55 trillion won, and everyday items jumped 11.1 percent to 1.64 trillion won.

Korea's July e-commerce sales and on-year growth from 2019 to 2024 [YOO YOUNG-RAE]

July purchases of e-coupons decreased 31 percent on year to 517.8 billion won. Sales dropped 45.5 percent from June, after reports of TMON and WeMakePrice’s payment delays started to surface in July.

Retailers stopped receiving Happymoney gift cards -- one of the most circulated vouchers in Korea -- as payment and the cards’ issuer, Happy Money Inc., stopped giving refunds after they realized the marketplaces would not compensate them for the products.

At least 300 billion won in damages has resulted as the Happymoney gift cards became practically useless, according to an industry insider cited by local newspaper The Korea Economic Daily.

A total of 12,977 customers had filed a class action lawsuit against Happy Money to the Korea Consumer Agency as of last Tuesday. The company filed for a restructuring program with the Seoul Bankruptcy Court on Wednesday.

Sales for computers and related hardware, bags, sports equipment and children’s products also dropped by 7.2 percent, 11.8 percent, 6.8 percent and 1.2 percent, respectively, on year.

Purchases made on mobile devices such as phones and tablets stood at 15.12 trillion won, up 6.9 percent from last year. They made up 75.7 percent of all transactions, up 1.0 percentage points from July 2023.

BY KIM JU-YEON [kim.juyeon2@joongang.co.kr]