Baemin ends operations in Vietnam after failing to deliver returns

A notice on Baemin Vietnam's withdrawal from the market posted on Instagram. [SCREEN CAPTURE]

Baemin, Korea's largest food delivery service, is exiting the Vietnamese market after four years as it failed to overcome the entrenched dominance of competitors like Grab and Shopee.

Baemin Vietnam officially announced its withdrawal from Vietnam, effective Dec. 8, attributing the decision to "the global economic downturn and intense market competition."

Germany-based Delivery Hero CEO Niklas Ostberg acknowledged the challenging landscape in Vietnam, stating in a media interview in August that "the overall Asian market was good with the exception of Vietnam, in which the company sees no return to profits even in the long term." Baemin Vietnam operates under the umbrella of Woowa DH Asia, a joint venture established by Baemin's mother company Woowa Brothers and Delivery Hero.

Baemin entered the Vietnamese market in May 2019 through the acquisition of local delivery platform Vietnam, leveraging the nation's youthful population, high mobile usage and the widespread adoption of delivery apps.

Yet as of last year, Baemin Vietnam held a 12 percent market share, according to data from market research firm Momentum Works, trailing far behind Grab with 45 percent and ShopeeFood with 41 percent.

Grab, a multi-service platform offering vehicle hailing and food delivery, has capitalized on synergies between its combined services, offering users advantages in point accumulation. ShopeeFood, the second-largest player, aligns with the ecommerce shopping platform Shopee for enhanced synergies.

Baemin Vietnam attempted to engage with locals through creative branding and marketing strategies, such as releasing exclusive handwritten fonts BM Daniel and BM Lucas and introducing its mascot Fat Cat and mint-colored hat riders. However, these efforts were insufficient to overcome the dominance of pre-established operators rolling out aggressive discounts and enjoying early-mover advantages.

Facing profitability challenges, the company took measures in September to downsize operations in areas such as Bac Ninh and Hoi An, and reduced staff in the process.

"Baemin is a good brand, attracting attention from users, but has not created a difference in products and services," an industry expert noted as quoted by Vietnamese publication Dan Tri. "Products, services, and diversity of restaurant systems are factors that determine users' use of food delivery applications."

A local media outlet, Cafef, highlighted Baemin's clear brand identity, emphasizing that instead of merely spending money on promotions, Baemin's marketing team deployed numerous communication campaigns that resonated and left an emotional impression on people.

Baemin, the food delivery application of the unicorn startup Woowa Brothers, holds over 60 percent of the market share in its home country, Korea. Woowa Brothers achieved unicorn status in 2018, with the company's valuation reaching $2.6 billion.

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]