South Korea's food delivery app users are increasingly concentrated on Baedal Minjok (Baemin) and Coupang Eats, intensifying a "two-player system." With the sale of Baemin underway, observers say a duopoly is likely to become entrenched as both companies are expected to expand promotions and marketing.
According to Wiseapp·Retail on Tuesday, Baemin recorded 15.24 million weekly active users (WAU) as of the second week of May, while Coupang Eats posted 8.45 million, both approaching record highs. The two platforms' combined share of the overall delivery app market also reached an all-time high of 88.3%.
By contrast, user numbers for other platforms have been declining. Ttenggyeoyo, a public delivery app, saw its WAU rise to 2.14 million last October on the back of free coupon support from the government and local authorities, but it has recently fallen to 1.1 million. Over the same period, Yogiyo also dropped from 2.28 million to 2.03 million.
The industry views it as only a matter of time before the two-player system, in which Baemin and Coupang Eats hold a combined share of more than 90%, becomes entrenched as the market concentration toward the two intensifies. If both platforms pursue various user-acquisition strategies such as additional discounts, expanded free delivery, and stronger memberships, they are likely to rapidly absorb users of other existing delivery apps.
In particular, the situation in which Uber and Naver have formed a consortium to attempt to acquire Baemin is also seen as a variable that will further solidify the two-player system. According to the investment banking (IB) industry, Uber and Naver formed an 80-20 consortium and participated in the preliminary bid, offering to acquire a 100% stake in Baemin for up to 8 trillion won.
If Uber acquires Baemin, the likelihood of aggressive promotions and marketing to expand its domestic market dominance is also considerably high. Uber entered the Korean delivery market in 2017 with Uber Eats, but lost out in competition with domestic operators such as Baemin and Yogiyo, eventually ending its Korean service in 2019.
The industry believes that since Uber has already experienced one failure, it will pursue more aggressive investment and marketing strategies to expand its initial share during its re-entry. In addition, if Naver also participates, additional effects are expected, including integration with Naver Pay as well as quick commerce expansion based on Naver's powerful e-commerce platform competitiveness.
"If Uber's global operating experience and capital power are combined with Baemin's domestic user data and infrastructure, plus Naver's commerce and payment ecosystem, a synergy effect is expected that could bring back not only existing Baemin users but also consumers who had moved to other platforms," a distribution industry official said.
Coupang Eats is also seriously considering a plan to extend free delivery benefits, previously offered only to Wow membership members, to general members as well. Last month, Coupang Eats submitted this as a win-win measure to the social dialogue body on delivery apps led by the Democratic Party of Korea's Eulji-ro Committee. The industry believes that such an expansion of benefits will draw in not only Wow membership users of about 14 million but also new users, further increasing Coupang's market share.
Another industry official said, "As users concentrate on Baemin and Coupang Eats, platforms with relatively low shares such as Yogiyo and Ttenggyeoyo can fall into a vicious cycle where declining users lead to fewer participating restaurants, which in turn leads to consumer departures." The official added, "The longer large-scale discounts and membership competition continue, the more likely market polarization will deepen."
