BAEMIN was once one of the top food delivery apps in Vietnam, popular for their vibrant blue uniforms and friendly marketing approach. However, a combination of operational challenges, market changes, and broader economic conditions ultimately led to their demise in the Vietnamese market.
This deep dive will analyze the key reasons behind BAEMIN's failure in Vietnam and discuss some of the lessons other startups and businesses can learn.
BAEMIN's Early Success in Vietnam
BAEMIN first entered the Vietnam market in 2019. At the time, startup investment and the overall economy were booming. BAEMIN's parent company poured significant funding into the Vietnam operations, positioning them as a strong competitor against industry leaders like Grab, Gojek, and ShopeeFood.
Their marketing appealed to Vietnamese consumers with a fun, carefree image. Positive PR and awards garnered during this initial growth phase helped establish BAEMIN as a household name. However, branding and marketing can only take a company so far. Sustained success ultimately depends on sound operational practices and business fundamentals.
Operational and Business Challenges Emerged
- Difficulty Managing Costs as Funding Declined
In their early years, BAEMIN was willing to discount commission fees heavily to attract restaurants and offer drivers generous incentives to expand pickup coverage. However, as investment cooled off, BAEMIN had to tighten spending. This impacted their competitive edge versus rivals still spending heavily on subsidies.
- High Overhead Burden with Limited Revenue Streams
Unlike super-apps with diversified revenue generators, BAEMIN relied solely on their food delivery operations. This high cost structure became unsustainable as revenues failed to grow fast enough to justify burn rates.
- Customer Behavior Shifted During Economic Slowdown
As inflation rose and economic uncertainty increased post-pandemic, Vietnamese customers tightened their budgets. Non-essential spending on food delivery declined. At the same time, rising costs forced many restaurants to leave the platform or push list prices higher on the app. These dynamics significantly reduced order volumes.
- Intensifying Competition from Super-Apps
Food delivery served as an important profit center for super-apps. Their diversified ecosystems also allowed cross-subsidizing operations until other business lines matured. This placed immense competitive pressure on a narrowly focused player like BAEMIN.
Market Changes Impacted Viability
The broader economic environment turned overwhelmingly negative for startups:
- Post-pandemic shift away from "growth-at-all-costs" mentality made investors demand clear path to profitability
- Rising interest rates drained liquidity from capital markets, limiting access to fundraising
- Many restaurants closed permanently, shrinking BAEMIN's addressable market size
- Customers traded down expenditure amid recession, further squeezing discretionary services like delivery
BAEMIN struggled to adapt their business model to a new cost-conscious reality. Without sufficient scale advantages or alternative revenue streams for support, the odds tilted heavily against long-term survival.
BAEMIN's Decline and Exit from Vietnam
Facing insurmountable challenges, BAEMIN took drastic steps in 2023 to stemming mounting losses:
- Workforce layoffs reduced operational expenses
- Withdrawal from lower-tier cities consolidated focus on major population centers
- Renegotiation of restaurant partnerships to claim a larger commission share
However, these measures failed to generate a turnaround. Continued negative cash flows made it impossible for BAEMIN's parent company to justify further funding.
In September 2023, BAEMIN officially announced cessation of Vietnam operations. Their iconic blue-shirted riders disappeared from streets as another once-promising startup fell victim to the post-COVID climate.
Lessons Learned from BAEMIN's Failure
BAEMIN's collapse holds valuable takeaways for startups navigating today's turbulent business conditions:
- Achieving scale advantages is critical for long-term competitiveness, especially in winner-take-all industries
- Revenue diversification mitigates risks from over-reliance on a single business line or geographic market
- Build operational efficiency from the start through streamlined cost structures and processes
- Maintain flexibility to pivot business models in response to rapid market shifts
- Secure sufficient cash reserves to withstand prolonged downturn periods
- Realistic valuation of long-term viability, don't delay the inevitable by throwing "good money after bad"
While the future remains uncertain, businesses that learn from failures like BAEMIN's will be better prepared to weather future storms. Survival demands constant evolution and adapting strategy to changing economical tides.
FAQs
Why did BAEMIN face more challenges than competitors?
BAEMIN relied solely on food delivery without other revenue streams for support. This narrow focus made them vulnerable when market conditions turned against their core business. Super-apps stayed afloat by leveraging diverse services across retail, mobility, payments etc.
Could BAEMIN have succeeded with a different approach?
BAEMIN may have fared better by expanding services sooner, adopting more subsidies prudently, or exiting weaker markets and refocusing resources. However, the post-pandemic economic headwinds were immense. Success would have still required nimble adaptation far beyond their actual capabilities.
What are some lessons for Vietnamese startups today?
Today's startups must build resilience through diversification, prioritize sustainable growth over volumes, control costs aggressively, and plan for downturn scenarios. Accessing later-stage funding also remains a challenge, so profitability should take priority over hyper-growth. Flexibility and dynamism will determine winners in this uncertain climate.
I hope this in-depth analysis of BAEMIN's rise and fall in Vietnam provides useful insights. Feel free to let me know if any part of the article requires further clarification or expansion.
