Balan, the No. 1 online luxury trading platform, has not been able to settle sales on time as it suffers from a liquidity crisis due to worsening profitability. Balan stores, which watched the large-scale sales of Timon and Wemakeff last year, seem to be very embarrassed. In addition, concerns are spreading as the Balan headquarters seems to have considered applying for corporate rehabilitation procedures. This is because shopping platforms such as Monogram, Timon, Wemakep, and Arletz all went out of business or corporate rehabilitation, starting with delays in settlement.
According to Balan and related industries on the 27th, Balan failed to deposit settlement money to some stores on the 24th. Balan calculates the sales price in three cycles of a week, 15 days, and a month for each store company, but failed to pay the price to the store company whose settlement cycle returned on the same day.
As of the 24th of this month, store companies estimate that Balan's unpaid amount is about 13 billion won, and it is expected to increase by hundreds of millions of won every day. Balan's average monthly transaction is around 30 billion won, and the total number of stores is about 1300.
It is known that the stores are not receiving settlement payments ranging from millions of won to billions of won. An official from another store said, "The delayed settlement is 500 million won, and some companies are not receiving up to 1.5 billion won," adding, "About 20 people are gathering to seek advice from lawyers and preparing a criminal complaint against CEO Choi Hyung-rok of Balan." Some stores, including "Lux Boy," dropped their products from Balan, while others sold out their products to prevent further transactions.
In this regard, Balan individually announced to the store company at the time, "We are recalculating the settlement amount because errors such as excessive payment of the settlement amount were found during its own financial inspection." However, the announcement of Balan rather provoked anxiety among stores. This is due to a growing sense of crisis as retailers' delays in payments to Homeplus have erupted one after another following the Timon and Wemakeff incidents last year.
A day later, on the 25th, about 20 officials from the store visited Balan's office and protested strongly. On the 26th, an official of a store company released a photo of the monitor screen to the online community, claiming that "they found files related to corporate rehabilitation on computers in Balan's office," sparking controversy over the start of corporate rehabilitation procedures. In response, Balan said, "I did not apply for corporate rehabilitation procedures. We will announce the fixed settlement amount and payment schedule by the 28th, but suspicions have not disappeared that they are actually considering applying for corporate rehabilitation procedures.
On the reason why Balan, whose corporate value once soared to 300 billion won, was pushed into a serious liquidity crisis, industry officials say, "It is because demand for luxury goods has completely declined." In particular, it is analyzed that the 2030 households, the main users of online luxury platforms, have been directly hit by reducing the money spent on luxury goods.
Earlier, domestic online luxury platforms, including Balan, grew rapidly during the COVID-19 period with excellent price competitiveness and low-profit structure compared to offline stores. However, after the pandemic, restrictions on overseas travel and overseas direct purchases disappeared and the demand to buy luxury goods online fell sharply due to high prices and a combination of economic downturns. In addition, as competition to attract customers became very fierce, profitability deteriorated significantly by increasing discount events and issuing discount coupons. Usually, the average return on luxury platforms is known to be around 10%, but it drops to single digits when holding discount events or issuing discount coupons. In addition, some analysts say that Balan's cash flow may have worsened due to a decrease in transactions by stores in the process of increasing the proportion of direct purchase sales to enhance competitiveness.
In fact, Balan's sales plunged 56% year-on-year to 39.2 billion won in 2023 and posted an operating loss of 9.9 billion won. Since its establishment in 2015, it has never made a surplus, and its total capital is also -7.73 billion won, which is completely eroded. Last year's performance has yet to be disclosed.
[Reporter Kim Hyo-hye / Reporter Kim Geum-yi]
