On November 24, BAEMIN - the leading food ordering application in Korea, officially announced its withdrawal from the Vietnamese market, ending a journey lasting more than 4 years.
According to announcement from BAEMIN, this application will officially leave the Vietnamese market from December 8, 2023.
The challenges stem not only from intense competition with major rivals such as Grab and Now but also from a combination of factors such as the impact of the COVID-19 pandemic, inappropriate business strategies, and the ability to generate profits in a challenging economic environment. The analysis below will provide an overview of Baemin's situation, from the reasons for their difficulties to the decision to suspend operations in Vietnam.
Primarily Focused on Food Delivery – Lack of Diversified Services
Consumer habits in Vietnam have shifted towards using multiple services on a single platform, such as Grab, Shopee, Now, etc. This shift has helped these businesses succeed in building diverse ecosystems, providing convenient experiences, and encouraging long-term platform usage.
In contrast, BAEMIN has primarily focused on providing food delivery and grocery shopping services for the past four years. This contradicts the prevailing "All-in-one" trend in consumer demands.
Joining the "Cash-Burning" Promotion Battle with Other Giants
The "cash-burning" promotion race has become a common tactic employed by giants like Grab and Now in the market. To penetrate this field, Baemin had to combine financial efforts. However, this strategy proved to have a reverse effect. Despite spending a significant amount to attract a large user base, the customer retention campaign did not yield the expected results. This situation posed challenges as the brand consumed a substantial budget without ensuring sustained performance.
With advantages in the number of drivers, diverse restaurant partnerships, and a rich service ecosystem, Grab and Shopee Food remain dominant names in the online food delivery market in Vietnam. Therefore, attractive marketing strategies alone were insufficient for Baemin to succeed in the Vietnamese market, as the brand still faced weaknesses in user experience and service.
Financial Pressure from the Parent Company Amid Low Profits
Alongside increasing pressure to generate profits from investors, Baemin faced financial pressure from its parent company as their profits in Asia declined. The parent company decided to focus resources primarily on the European and American markets, simultaneously reducing the budget for business operations in Vietnam. This financial cutback decision placed Baemin in a challenging position, preventing them from maintaining the "cash-burning" strategy to compete with major rivals. This led to a dwindling market share and increasing losses.
Conclusion
Facing financial pressure from the parent company and a challenging business environment in Vietnam, Baemin has made the difficult decision to withdraw from this market from 8 Dec 2023. This decision is not only a strategic move but also a result of numerous challenges that Baemin had to confront, from the ineffective "cash-burning" promotion race to the competitive pressure from major rivals.
Withdrawing from the Vietnamese market not only relieves financial pressure for Baemin but also opens up opportunities for them to concentrate on other markets where they can leverage their competitive advantages more effectively. Although it may be a tough decision, Baemin hopes that this strategic adjustment will help them restructure and thrive in the future.
Source: Tuoitre, Vietnamnet
