Korea’s food delivery apps engage in fierce competition for free services

2024.04.02 11:12:01 | 2024.04.02 11:24:53

[Photo by MK DB]이미지 확대

[Photo by MK DB]

South Korea’s three major food delivery apps ? Coupang Eats, Baedal Minjok (Baemin), and Yogiyo ? have escalated a chicken game by successively launching free delivery services, intensifying the battle for market dominance.

The competition heated up last month when Coupang Eats introduced an unlimited free delivery service for its Coupang WOW members.

In response, Baemin, the market leader, initiated a free delivery service on Monday, directly challenging its rival.

Last year, Yogiyo had introduced Yogi Pass X, offering free delivery services, and last week, the app further intensified the competition by reducing its subscription fee to 2,900 won ($2.15) from 4,900 won.

Woowa Brothers, the operator of Baemin, announced on Monday that it is offering free delivery charges under its Thrifty Delivery program.

The program, which was introduced in April last year, allows delivery personnel to deliver orders to multiple houses in a single trip.

Baemin’s move came just a week after Coupang Eats made its similar bundle delivery service free, marking a direct confrontation between the two players.

Baemin has made the free delivery service available to its users by providing unlimited free delivery coupons, whereas Coupang Eats charges a monthly subscription fee of 4,990 won for Coupang WOW membership, and Yogiyo charges 2,900 wow for Yogi Pass X.

However, Baemin has upped the ante by offering the subscription itself for free.

Coupang Eats has decided to operate a service offering a 5-10 percent discount per order as a temporary measure until May, but Baemin has decided to continue offering a 10 percent discount for both its single-destination and thrifty deliveries.

Baemin, holding over 60 percent market share and maintaining its leading position, has taken these aggressive steps in light of Coupang Eats’ formidable growth.

Coupang Eats offers free delivery for Coupang WOW members regardless of the number of orders, amount, or distance, although premium single-house delivery service users still pay delivery fees.

However, Coupang Eats has significantly increased customer satisfaction by providing its bundled delivery service for free without any minimum order requirements, a condition Baemin imposes for its thrifty delivery service.

As Coupang Eats rapidly encroaches on the delivery app market, armed with over 20 million Coupang WOW membership subscribers, Baemin has sought to differentiate itself by allowing customers the freedom to choose a 10 percent discount benefit.

However, Baemin faces a disadvantage as it can only start this service in the Seoul metropolitan area due to operational constraints, while Coupang Eats has rolled out its free delivery service in major cities nationwide, including the capital region and metropolitan cities.

According to Statistics Korea, the online transaction volume for food services (delivery food) was about 26.4 trillion won last year, marking the first year-on-year decrease since data compilation began.

This comes after a rapid increase from about 2.73 trillion won in 2017 to about 26.59 trillion won in 2022, spurred by the Covid-19 pandemic.

By Kim Gyu-sik and Minu Kim

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