Home > Business > Industry

Balaan down after failing to pay vendors for week, claims money coming 'as soon as possible'

Published: 30 Mar. 2025, 20:21 Updated: 30 Mar. 2025, 20:22

CHO YONG-JUN
[email protected]

Luxury retail e-commerce platform Balaan's website [SCREEN CAPTURE]

Luxury retail platform Balaan suspended all new purchases on Friday afternoon, having accumulated up to 13 billion won ($8.9 million) in debt to sellers since Monday.

Customers are unable to purchase any products listed on the platform as of press time, with all payment options, including credit card and Balaan Pay, the platform’s proprietary payment service, nonoperational. Balaan wrote on its payment page that “all payment options are unavailable” and that it was “working to resume services as soon as possible,” without providing further explanation or a recovery timeline.

But the system issue is unlikely to be temporary. Vendors have accused Balaan of delaying their payouts, evoking the recent decline of TMON and WeMakePrice.

Balaan’s payout issue

The platform first paused its payout plans on March 24, citing system maintenance and improvements. Balaan claimed the following day that it had identified “errors where certain vendors were overpaid” and vowed to recalculate its payment figures by March 26 and share further details by March 28.

But according to listed partners, the platform did not share the updated payout plans on March 28 and instead shared an apology letter from its CEO, Choi Hyung-rok.

“We will be finalizing the plan by this week, and by next week, I will be approaching the vendors in person and hosting an event to transparently share the full account and future plans,” the CEO wrote in an internal notice to the sellers on Friday.

“The issue is not a case we can independently decide on but requires discussion and agreement from existing investors and other interested parties, so please understand that we cannot communicate faster,” the CEO said, without confirming further details regarding the payment plans.

Online luxury retail platform at risk

“If the platform falls now, it’s not just Balaan; it can shake the trust of the entire online luxury market,” the CEO said in the notice Friday.

But the vendors, who were expecting to see updates regarding their payment schedules, are both disappointed at worried at the same time.

“I thought they’d give a detailed payout plan, but now I’m so anxious,” said a luxury item parallel importer that listed their products on Balaan. The importer said the platform still owes him 500 million won. “I can’t even directly contact the person in charge.”

Other businesses have also raised concerns, finding Balaan’s case similar to the payment crises at TMON and WeMakePrice, which also cited system maintenance for their initial payout delays. The two e-commerce platforms now in receivership, having been unable to resolve their overdue payments to sellers or refund customers.

If Balaan follows TMON and WeMakePrice and applies for receivership, sellers would likely not receive their payouts anytime soon.

Silicon2, the K-beauty trade and distribution firm that has invested 15 billion won in Balaan in recent months, is also in a troubled situation. The firm completed its initial investment of 7.5 billion won on Feb. 28.

Is the luxury market bubble bursting?

Even if Balaan manages to solve its payment crisis, the platform’s outlook won’t be that positive — economic downturn and reduced customer spending have caused the luxury market to shrink in recent years.

The luxury market that grew during the Covid-19 pandemic, with consumers who were unable to travel abroad spending their money instead on luxury products, took a hit as that pandemic came to an end. Eland Group’s luxury platform Luxury Gallery closed in December, and the luxury preorder platform d.code shut down in early 2025. Similarly, Catch Fashion closed last March.

Must It and Trendbe, the other two major luxury e-commerce platforms, have shared liquid asset and deposit numbers in an attempt to reassure their sellers in recent days as rumors of a payout crisis at Balaan grow.

“The luxury market itself is in a decline,” a source in the retail industry said. “On top of that, e-commerce platforms such as Coupang, SSG.com and Lotte ON are increasing their sales of luxury goods.” SSG.com is Shinsegae Group’s e-commerce platform.

“Online luxury retail platforms that have been relying on external investments are in a risky situation.”

BY KIM KYUNG-MI [[email protected]]