What Could Oasis Show If It Acquires TMON?
🍋🟩 You can find out by reading this!
- This is news that Oasis has signed a conditional investment agreement to acquire TMON. There's a possibility that they will acquire TMON, which is currently undergoing corporate rehabilitation proceedings, for around 20 billion won. The commerce industry is buzzing with this news. With total assets of approximately 70.25 billion won and total liabilities of 1.0191 trillion won, will acquiring TMON be a gain or a loss for Oasis? We've heard the pros and cons being debated on the ground.
- Oasis's purpose in acquiring an online commerce platform is quite clear. Oasis attempted to acquire 11st last year but was unsuccessful, and now they are pursuing the acquisition of TMON. According to Oasis's disclosed financial statements, Oasis had enough cash assets to pursue the TMON M&A strategy, even though TMON's corporate value has fallen significantly. Moreover, there was clear numerical evidence that they should focus on online business expansion. We'll take a look at the related content.
- However, no matter how much cash Oasis has, acquiring TMON and fully digesting it as their own is a separate issue. Questions follow about whether Oasis, which has grown based on offline stores and focused on the online grocery shopping and dawn delivery business, will be able to create synergy by acquiring an open market. First of all, many evaluations said that operational OOO must be secured before synergy with TMON. You can find out what it is through the main text.
- If Oasis succeeds in acquiring TMON, it will be a 'third way' in itself. It is attempting category expansion in a different way from how Kurly increased its items to include miscellaneous goods and beauty products. It's a strategy to secure online sales channels, the opposite of how Jung Yuk Gak increased its offline bases by acquiring Chorocmaeul. If this works, they will be able to take another step towards the IPO that all commerce companies dream of. We've heard the optimal IPO scenario from the industry.
CHAPTER 1
Oasis Participates in the TMON Acquisition
Oasis, a specialized distributor of eco-friendly and organic fresh food, is pursuing the acquisition of TMON. Multiple media outlets reported on the 6th that Oasis signed a stalking horse* conditional investment agreement with EY Hanyoung Accounting Firm, the sales manager for TMON and Wemep. Oasis was selected as the preferred bidder for the acquisition of TMON, and the acquisition price is known to be around 20 billion won.
*Stalking Horse: An M&A method in which a buyer is pre-determined before selling a company, and then other buyers are sought through competitive bidding to offer better conditions. (Source: Yonhap Infomax Current Affairs Financial Terms)
The commerce industry is buzzing with this news. This is because TMON was once one of the leading domestic commerce platforms, recognized with a corporate value of trillions of won. However, its value gradually declined due to continued losses and sluggish sales, and the TMON-Wemep situation was the final blow, and it is currently undergoing corporate rehabilitation proceedings. According to the due diligence report by EY Hanyoung Accounting Firm, TMON's total assets are approximately 70.25 billion won, and its total liabilities are approximately 1.0191 trillion won.
Accordingly, there are mixed opinions on whether Oasis's acquisition of TMON will be a gain or a loss. In the industry, there are various opinions, from positive opinions such as 'an opportunity to absorb TMON's commerce capabilities and customers at a low price' to negative opinions such as 'Oasis and TMON's business characteristics are too different' and 'TMON is a platform that has lost trust along with chronic losses.'
In this content, we first looked at why Oasis wants TMON. Then, we predicted what would happen if the acquisition is ultimately successful by synthesizing the opinions of commerce industry officials. In particular, experts in the distribution and commerce industry unanimously said that the Oasis side needs to try 'these strategies' to go through the difficult path of re-challenging the IPO. Let's find out what it is.
CHAPTER 2
Finding the Reason in Oasis's Strategy, Financial Statements
Oasis is one of the few online and offline commerce companies that have continued to operate with a surplus. It has recorded steady profits since 2011. According to the Electronic Disclosure System, Oasis recorded sales of approximately 128.5 billion won and operating profit of approximately 4.9 billion won based on its consolidated financial statements for the third quarter of last year.
During the same period, Oasis's current assets were 167 billion won. Among them, cash and cash equivalents accounted for approximately 139.8 billion won. Judging from this, it can be seen that Oasis was able to aim for this TMON acquisition following the previous 11st acquisition attempt because it had ample cash 'bullets.' The commerce industry also expects that the TMON acquisition itself will not be a big burden for Oasis.
In addition, product sales account for 97.85% of Oasis's total sales, and the proportion of online sales channels is increasing every year. The online sales ratio, which was 62% in 2022, rose to 67% in 2023 and 71% in the third quarter of 2024. Oasis operates the online Oasis Market along with offline direct stores. Among them, the proportion of online sales is gradually increasing.
In summary, Oasis is pursuing the acquisition of an e-commerce company to maximize its online sales, which are gradually increasing, based on a stable business operating environment and sufficient cash assets. It can be seen that they are seeking a breakthrough online because growth in the offline environment is clearly limited until they reach the IPO.
Among them, TMON is an open market platform that had about 5 million customers until just before the TMON-Wemep incident, while the acquisition price has fallen as much as it can from its peak. Oasis calculated that it could benefit from both securing additional online customers and expanding sales categories by acquiring TMON.
"Oasis and TMON's main target customer base is quite similar. It's women in their 30s and 40s. On the other hand, their main categories are different. Oasis's main products are fresh food and grocery shopping items, while TMON has been competing with ultra-low-price hot deals until recently, with weak fresh food. From this perspective, if Oasis acquires TMON, I think they can create synergy by concentrating each other's capabilities to target the main customer base and complementing each company's shortcomings in terms of product categories." - Person A in the commerce platform industry
CHAPTER 3
Sustainability Before Synergy
But here's the thing. For synergy between Oasis and TMON to be fully realized, there are many problems that need to be solved first. First, after going through the TMON acquisition process, it will be necessary to reorganize the organization and personnel. Next, they must strive to restart TMON's business as a whole, which has been stopped. And decisively, Oasis must be able to sustain the online open market business, which it has no experience in. The commerce industry is particularly emphasizing this sustainability.
"I think the reason why Oasis has been able to maintain profitable operations is because Oasis has steadily and slowly grown its business based on offline distribution. Meanwhile, the online open market business has all the opposite attributes. As most commerce platforms do now, they have to pour out various marketing costs to attract visitors and buyers, and they may or may not be able to continue operating at a loss indefinitely. I'm curious if Oasis has an appropriate strategy for this." - Person A in the commerce platform industry
"It is true that TMON has accumulated various networks and know-how based on its history. However, it is also true that it has lost a significant portion of trust from both buyers and sellers after the TMON-Wemep incident. Above all, I know that a significant number of talented people have left TMON, so overcoming this will be the key. It seems that the key will be what kind of people Oasis will recruit and place in the right places with the TMON acquisition, and whether they will be able to safely overcome the large and small mountains they will encounter until they reach the IPO with them. We should pay attention to the sustainability of the business after the acquisition, rather than the acquisition itself." - Person B, former Qoo10 Group official
CHAPTER 4
If You Overcome the Limitations of a Single Channel and Item
On the other hand, if Oasis uses TMON as a stepping stone to fully expand its e-commerce business based on the profitable power it has built up, it could be a new challenge. This is because Oasis's open market acquisition could be a completely new model that has never been seen in Korea before.
In the e-commerce market so far, there have been two main paths. One is the case of starting as an online platform from the beginning and challenging a new market, and TMON was one of them. The other is the case of offline manufacturers and distributors entering the online market. This includes manufacturers' own malls and platforms expanded by offline distributors such as Lotte's Lotte On and Shinsegae's SSG.com. Compared to this, the direction that Oasis is currently pursuing can be analyzed as a third way.
"Oasis has succeeded in creating demand over a long period of time, centered on offline stores, as a distributor that handles eco-friendly and organic fresh food. This is a distributor in name, but in fact, it also has the nature of a manufacturer that exclusively provides inexpensive and high-quality PB products. And Oasis expanded the customer contact point by expanding the product in the form of an online mall and adding dawn delivery. Since there are limitations to this, they are embarking on a full-fledged online transition based on the TMON acquisition. This is a step further than other manufacturers' own mall operations. It is also a different starting point from open markets that require external sellers from the beginning or online malls based on distributors." - Person C, fresh food commerce platform official
"There are two reasons why Kurly initially caused a big reaction. Unique products and dawn delivery. This is similar to the secret of Oasis's steady growth of its online mall. Kurly, which has grown to a certain size, has expanded its items to include various miscellaneous goods and beauty products in addition to fresh food. I think this is an essential course for expansion. As another example, Homeplus, which recently entered corporate rehabilitation proceedings, can be seen as having come to this situation by adhering to offline-centered operations from basic sales to delivery and quick commerce businesses. Aside from other situations, it is proof that there are clear limitations to growth by insisting on offline only. At this time, Oasis can create another possibility in that it wants to walk a new path of open market acquisition following offline store and online mall operation." - Person A in the commerce platform industry
In summary, Oasis is facing a new challenge to expand sales channels and items beyond the limitations of the offline stores and online malls it has been operating. Of course, as explained above, it may have to go through an indefinite period of endurance until the synergy of open market acquisition is achieved. However, it has also received expectations that it can pioneer a path in a way that is different from the grammar so far.
CHAPTER 5
What is the Optimal IPO Scenario Said by Industry Professionals?
Then, what is the optimal scenario for Oasis to show the growth and expansion potential of the company until it reaches the IPO after acquiring TMON? Related to this, the stories of current commerce industry officials can be summarized into three main elements.
One is that they must maintain a sales strategy centered on product competitiveness. Oasis's current market competitiveness lies in its product exclusivity, which sells high-quality eco-friendly and organic products at relatively low prices. Efficiency is created by reducing fresh food waste through online and offline linked sales. In this regard, commerce MDs evaluate "Oasis Market is close to a PB product-only mall."
If they simply add TMON as a sales channel and start selling the same products, it is expected that channel cannibalization will occur due to the characteristics of consumers who chase the lowest price, and it will be difficult to see any significant sales increase effect. Therefore, e-commerce MDs say that it is necessary to develop a variety of dedicated products suitable for open markets and full-fledged nationwide delivery channels. At the same time, a two-track strategy will be needed to maintain the 5 million members that TMON gathered with its ultra-low-price hot deal strategy just before the TMON-Wemep incident.
The next is logistics investment. Unlike competitors such as Kurly, Oasis has invested in online mall expansion relatively slowly, centered on offline stores. Perhaps that's why it is evaluated that it is still less competitive in terms of logistics center size and automation rate. Last-mile delivery also depends on external partners. Therefore, it is expected that logistics infrastructure investment will be necessary for full-fledged synergy with TMON.
The last is the choice to erase TMON's brand name. Since the TMON-Wemep incident, many sellers, including travel agencies, have been experiencing unsettled payment problems. Consumers also remember negative issues such as large-scale refund incidents. Accordingly, there were many opinions that it would be better to make a fresh start with an independent brand name related to Oasis, not TMON, in the short and long term. This may be the same even if another acquirer other than Oasis appears. First of all, it is necessary to watch whether Oasis can succeed in acquiring TMON.
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