Despite stellar performance that brought significant change in the retail market landscape, Korea’s mobile-focused e-commerce giants are facing a crisis as they struggle to cover the losses resulting from intense competition.

Rumors have been circulating around the market that the three leading mobile shipping platforms are already in the red due to hefty spending into delivery and logistic service -- a common strategy to dominate the market with no concrete No. 1 player yet. They face a combined deficit of 700 billion won ($610 billion), according to watchers.

Coupang is saddled with 500 billion won of losses while Ticket Monster and WeMakePrice each shoulder 100 billion won in deficit. The online market retailers are in the market spotlight this week as all of them are to release detailed figures in their regulatory filing Thursday.

According to industry sources, the size of the mobile shopping market expanded to 8 trillion won last year from 790 billion won in 2011, equivalent to 60 percent of E-mart’s sales both from online and offline markets.

The profits, however, tell a different story, as the mobile-oriented retailers are engaged in a fierce price war.

To overturn their massive deficits and to keep their businesses running, they are making desperate attempts to seek investment.



“Even though e-commerce retailers are in the red, investors see their businesses as profitable as they record around 15-20 percent growth a year,” said Ha Joon-young, a market analyst at Hi Investment and Securities.

“There is plenty of room for growth as the mobile market accounts for only 14 percent of the entire retail market,” he said, referring to a recent data by Statistics Korea.

Coupang already secured $1 billion from SoftBank Corp. in June last year, marking the largest-ever investment in the online sector in the country. In 2014, the retailer attracted funds from U.S. investors of a combined $400 million from Sequoia Capital and Blackrock.

Its competitors are also moving fast.

TMON announced Monday that it has attracted 47.5 billion won from NHN Entertainment, a gaming and entertainment provider here. They have also forged a partnership to promote NHN’s mobile payment system PAYCO via TMON, and agreed to work to seek ways to innovate on the entire shopping process by applying technology and data resources.

WeMakePrice has also been seeking business expansion, drawing about 100 billion won from NXC, parent company of Nexon, a major PC and online games provider, last year.

 Securing fresh funds is the key for growth for all e-commerce retailers for now, but the race for the No. 1 position in the market could also be risky too, experts warned.

“The growing sales by online retailers reflect their business potential, but the excessive investments and the deepening price war with (traditional players such as) supermarket chains could drag down all players in the retail market,” said an official who declined to be named.

By Cho Chung-un (christory@heraldcorp.com)