Deliveryman (Image courtesy of Yonhap)
SEOUL, May 20 (Korea Bizwire) – The competition among South Korea’s major food delivery apps — Baedal Minjok, Coupang Eats and Yogiyo — to poach customers from one another is intensifying into a bruising battle.
The clash among the three services erupted last year over discounts on delivery fees. After a brief lull, their rivalry reignited last month with the introduction of free delivery offers, and it is now escalating further with the rollout of subscription services.
Woowa Brothers, the operator of Baedal Minjok, South Korea’s largest delivery app, recently announced plans to introduce a subscription service called Baemin Club.
Under the membership program, customers paying a monthly fee would enjoy benefits like free delivery for group orders and discounted fees for individual orders. Customers spending above a minimum order amount set by restaurants would qualify for discounts even on single-item orders, and could combine the membership with other coupons for additional savings.
Coupang Eats already offers free group delivery to customers who subscribe to the Coupang Wow service, while Yogiyo provides free delivery on orders above 15,000 won for subscribers of its Yogiyo Pass X membership.
With all three rivals now operating membership programs, competition in South Korea’s delivery market is expected to intensify further.
Baedal Minjok’s move is seen as a response to the recent growth of Coupang Eats. “The delivery market has stagnated, so each company is scrambling to find a breakthrough,” said Lee Eun-hee, a professor of consumer studies at Inha University. “Baemin likely introduced the membership program to protect its user base.”
On March 26, Coupang Eats fired the first salvo by offering free delivery to Wow subscribers. Yogiyo responded on April 1 by slashing its Yogiyo Pass X subscription fee from 4,900 won to 2,900 won per month. That same day, Baemin gave customers the option of free group delivery instead of a 10% discount.
A delivery worker in Seoul. (Yonhap)
When Coupang raised its monthly subscription fee by 58.1% to 7,890 won on April 13, Baemin again revised its policy, keeping only free group delivery while eliminating the 10% discount option and lowering base fees for individual orders.
The introduction of free delivery has shaken up South Korea’s food delivery market, according to data from Wiseapp, an app and retail analysis service.
In March, Coupang Eats’ user base of 6.49 million surpassed Yogiyo’s 5.98 million users, propelling it to the No. 2 position for the first time since its 2019 launch.
In April, the gap widened further, with Coupang Eats boasting 6.97 million users compared to Yogiyo’s 5.76 million — a difference of 1.21 million, more than double the previous month’s 510,000.
While market leader Baemin remained far ahead with 21.09 million users in April, it lost 170,000 users from March.
Last year, Coupang Eats had already disrupted the market by offering discounts of up to 10% for Wow members starting in April, prompting Baemin to roll out perpetual 10% discount coupons and Yogiyo to revamp its Yogiyo Pass X paid membership.
The three delivery giants are reportedly pouring massive sums into eliminating delivery fees, raising doubts about the sustainability of their cutthroat competition.
Small business owners fear the intensifying rivalry will directly harm restaurants. To qualify for “free delivery” status, eateries must enroll in new pricing plans that raise their commission rates compared to previous schemes.
For Baemin’s “Baemin 1 Plus” plan enabling free delivery, restaurants pay a 6.8% commission plus 2,500-3,300 won in delivery fees on top of the base rate. Coupang Eats’ “Smart Pricing” consists of a 9.8% commission plus 2,900 won delivery charge. Yogiyo demands a 12.5% commission.
“Businesses sticking to old pricing won’t get orders from customers seeking free delivery, effectively forcing them to switch plans,” a franchise industry official said of what they called a “semi-compulsory” transition.
Consumer advocates warn that despite the illusion of free delivery, the costs will ultimately be passed on to diners. “Free delivery may seem appealing, but it could end up being a mirage if the costs are simply shifted to food prices,” said Jung Ji-yeon, secretary-general of the Citizens’ Coalition for Economic Justice.
Ashley Song (ashley@koreabizwire.com)
