[Reporter’s Notebook] An Urgent Need for a Control Tower to Prevent a Second 'Ballan'

Recurring Platform Settlement Issues
Immediate Resolution Difficult with Current Legislation
A Control Tower Needed for Platform Management

"It was only a matter of time before this happened."

This was the reaction within the e-commerce industry when Balan, a luxury goods platform at the center of the unsettled payment crisis, finally filed for corporate rehabilitation. After the payment settlement issue emerged on March 24, Balan repeatedly offered the excuse for a week that "a payment system error was causing delays in settlements," parroting the same line, before ultimately opting for court receivership. The delayed settlements attributed to system errors, promises to "minimize losses for sellers," and the sudden application for corporate rehabilitation all closely resemble last summer's nationwide "Timapeu (Timon + Wemakeprice) incident."

Just as there were warning signs for Timapeu, whose losses increased every year, there were also indications for Balan. Founded in May 2015, Balan saw its corporate value soar as luxury consumption surged alongside the explosive growth of the e-commerce market during the COVID-19 pandemic. In 2020, Balan's revenue was only around 20 billion won, but by 2022, it had grown to 89.1 billion won, attracting large-scale investments from dozens of venture capital firms, including Naver.

However, Balan never once turned a profit since its founding. As the economic downturn sharply reduced the number of luxury consumers, the company's performance plummeted. In 2023, Balan posted revenue of 39.2 billion won and an operating loss of 1 billion won. Without generating cash, the company relied on investment funds to operate. Ultimately, in 2023, Balan's total equity fell to minus 7.7 billion won, completely erasing its paid-in capital of 470 million won and plunging into a state of complete capital impairment. At the time, Samdo Accounting Corporation, the external auditor, noted that "there is significant uncertainty regarding the company's ability to continue as a going concern."

Although warning signs were present, the damage was repeated. Even amid a liquidity crisis, Balan attracted more sellers and investors by running corporate advertisements featuring big-name stars and distributing coupons. The unsettled payments at Balan are estimated to total around 13 billion won. The bigger problem is that more platforms may struggle to survive as businesses in the future. Already, before and after the Timapeu incident, luxury goods trading platforms such as MonogramG and Allets closed down, leaving unsettled payments behind. Mustit and Trenbe, which, along with Balan, were collectively referred to as "Meo-Teu-Bal," have shifted their business models to enter the secondhand market, but their losses continue to mount each year without any profit.

After the Timapeu incident last year, a revision to the Large-Scale Distribution Business Act was proposed, mandating that platforms with annual sales of over 10 billion won separately manage 50% of sales proceeds and pay sellers within a maximum of 20 days. However, it appears that it will take time for the bill to be enacted. Moreover, since the revision focuses solely on the settlement of sales proceeds by e-commerce platforms, it lacks safeguards to oversee platforms that survive by using new investments to pay off previous obligations, as Balan did.

If things continue as they are, with only sellers and consumers being expected to exercise caution, it is only a matter of time before a third Timapeu or a second Balan emerges. There is an urgent need for a control tower to oversee e-commerce platforms.