As Coupang and Naver cement a two-horse race, the crisis facing mid- to lower-tier e-commerce platforms is accelerating.
According to the industry on the 18th, Newnex, which operates the fashion platforms Brandi and Hyber, filed for commencement of rehabilitation proceedings with the Seoul Bankruptcy Court on the 16th. Through a seller notice in the names of its executives and employees, Newnex said, "We have filed for commencement of rehabilitation proceedings with the court," and noted, "This is not about winding down or stopping the company, but a measure to correct our financial structure and normalize management under the court's oversight and supervision."
According to the Financial Supervisory Service, Newnex's total equity last year stood at minus (-) 30.6 billion won, putting it in a state of complete capital impairment. Revenue was 19.5 billion won, down 66% from a year earlier, and it posted an operating loss of 500 million won. Samduk Accounting Corporation, which conducted the audit at the time, said, "It is exposed to liquidity risk. There is doubt about its ability to continue as a going concern." Accordingly, the company cut its workforce from more than 440 in 2023 to about one-tenth of that level early this year.
Founded in 2014, Newnex began with the women's clothing shopping mall Brandi and expanded into a fulfillment (comprehensive logistics agency) business to open online sales channels for Dongdaemun fashion wholesalers. At one point it was valued at 800 billion won and raised about 150 billion won in cumulative investment. It grew by acquiring equity stakes in platforms such as Zipggumigi and Seoul Store.
However, as performance lagged and investment in the platform market froze, it struggled when it failed to secure additional funding. In the end, Zipggumigi was sold at a lower price than the acquisition just one year after the deal, and Seoul Store shut down its service two years after acquisition.
In the industry, there is an interpretation that restructuring is gaining full steam as the e-commerce market contracts. This year alone, Seoul Store (fashion), Funshop (toys), BALAAN (luxury), Zipggumigi (living), and Jeongyukkak (livestock products) have either closed or entered rehabilitation proceedings. Broadening the scope through last year, as many as 20 e-commerce platforms either shut down or entered rehabilitation proceedings, including comprehensive malls TMON, WeMakePrice, and Interpark Shopping, as well as Catch Fashion (luxury) and Hnstyle (luxury).
Some analysts say only platforms acquired by large corporations have survived. Zigzag, once called one of the "top three women's shopping malls" along with Brandi, turned an annual operating profit for the first time last year after being acquired by Kakao in 2021. Also, 29CM was acquired by Musinsa, and W Concept was acquired by Shinsegae Group's SSG.com, and both are currently operating in the black.
It is not easy for corporations that have once undergone rehabilitation to make a comeback. In the case of TMON, which was acquired by OASIS, it has emerged from court receivership, but it has not been able to set a schedule to resume service due to pushback from affected vendors and others.
Korea's e-commerce growth rate has slowed to below 10% since 2023. Amid this, as unsettled transaction payments at some platforms drive sellers and consumers to prefer large platforms, market competition is being reorganized around top comprehensive malls like Coupang and Naver.
Jung Jin-won, a researcher at NICE Investors Service, said, "Coupang and Naver's share of online shopping transaction value rose from about 50% in 2021 to over 70% last year," and added, "Going forward, Coupang and Naver are expected to strengthen their market dominance based on strong traffic attraction, logistics capabilities, and price competitiveness."