Balan: The Apex of Glory and the Abyss of Downfall, The Darkness Lurking Behind the Splendor

Balan began in 2017 with the vision of a luxury fashion marketplace connecting local European luxury boutiques with global shoppers, rapidly growing in the Korean market and reaching its peak in 2021 with sales of KRW 89.1 billion. However, its growth story subsequently showed cracks. The entry of large e-commerce players like Coupang into the luxury market, changes in consumption patterns after COVID-19, a slump in the luxury market, and internal growing pains collectively raised increasing doubts about Balan's sustainability. Its financial situation severely deteriorated, with total equity plummeting from KRW -7.7 billion in 2023 to KRW -18.0 billion in 2024. In the same year, it recorded an operating loss of KRW 7.2 billion and a debt of approximately KRW 30.0 billion, revealing the harsh reality hidden behind its once glamorous facade. A bigger problem was Balan's response despite the crisis signals. Instead of restructuring or cost reduction, it expanded its business into used luxury goods, living, kids, and contemporary fashion, and continued issuing coupons. This strategy ultimately led to a situation where it could not settle sales proceeds amounting to tens of billions of won for its sellers. Balan's case provides a lesson that building a sustainable business is difficult with rapid growth and grand visions alone. It highlights the importance of financial soundness, a robust business model, and appropriate responses in crisis situations. CEO Choi Hyung-rok has expressed his willingness to accept conditions including lowering the company's valuation to one-tenth of its previous level and relinquishing management rights. While this is an expression of responsibility, the path to recovering the outstanding seller payments and over KRW 70.0 billion in lost investment funds will be arduous. It remains to be seen whether CEO Choi's promise of "substantial change and resolution through face-to-face communication starting next week" can truly rescue Balan from its crisis. What Balan needs is not a grand vision, but trust recovery through realistic solutions and fundamental structural improvements.