Korean e-commerce company TMON CEO Lee Jin-won poses at the firm’s head office in Seoul. The company offers to pay sellers who take advantage of its open market platform ahead of an initial public offering. Photo courtesy of TMON

Korean online retailer makes desperate efforts

Last year, Google caught the e-commerce industry by surprise as it permanently waived commission fees on products sold through its payment option.

Korea’s TMON goes a step further _ instead of charging commissions, it will pay some sellers who take advantage of its open market platform beginning this month.

Under pre-set conditions, merchants will be additionally paid 1 percent of product prices by TMON. They will also be exempted from payment gateway fees, which are ordinarily around 3 percent.

In case a vendor sells a product valued at $100 through TMON, he or she will net $101 thanks to the 1 percent ‘negative commission’ system.

“The new commission format is aimed at satisfying consumers and partners,” TMON CEO Lee Jin-won said.

But observers point out that the unprecedented commission policy is designed to boost the sales ahead of its initial public offering (IPO) in the coming years.

Encouraged by the success of its bigger rival Coupang, TMON vies to go public in late 2021 or early 2022.

Coupang, called a Korean answer of Amazon, debuted on the New York Stock Exchange last month to raise a total of $4.6 billion through its up-sized IPO.

Imminent IPO?

“This is not the first time for TMON to go for IPO. In consideration of its past failure, TMON appears to aim for top-line growth this time around,” HMC Investment & Securities Kim Hyun-yong said.

“Some expect that TMON will be able to turn a profit later this year. Even if it manages to do so, the profit would not be that big. Against this backdrop, it might be a good strategy to raise its sales volume.”

TMON, owned by two private equity funds of Kohlberg Kravis Roberts (KKR) and Anchor Equity Partners, tried to go public in 2017, but its disappointing performances led to a failure.

Last year, TMON CEO Lee said that the company would try to become profitable in 2020. But TMON is estimated to have racked up some $20 million losses last year.

Its 2020 financial statements will be disclosed later this month.