South Korea’s online food delivery market is poised to hit a record high in transactions in 2024 as lower fees triggered by Coupang Eats’ free deliveries has spurred the growth in their app users even after the lifting of COVID-19 lockdowns.
The market, led by Baemin, Coupang Eats and Yogiyo, is forecast to swell to 27 trillion-28 trillion won ($19 billion-20 billion) this year, surpassing its previous record of 26.6 trillion won hit in 2022.
Their January-September transactions reached 21.4 trillion won, according to Statistics Korea. That is far above the 19.6 trillion won in the same period last year and 20.1 trillion won in the comparable period in 2022.
The rapid growth defied concerns of food delivery demand stagnating or declining after peaking during the COVID-19 pandemic and reaching its growth limits amid soaring food prices.
Coupang Eats’ introduction of free deliveries for its paid membership users in March this year has fueld a sharp increase in its app users. It has been eating away at the market shares of Baemin, short for Baedalminjok and Yogiyo.
Baemin and Yogiyo came up with free deliveries for some services and cut their membership prices, leading to growth in the domestic online food ordering market.
Delivery fees were a psychological resistance for online food ordering users.
In a recent survey of 1,000 food delivery app users in the 20-50 age groups conducted by Kang Sanggyun, a professor in the Department of International Logistics at Chung-Ang University, 62% respondents said delivery fees were their top consideration in deciding to use the apps.
Food prices (49%) and discount coupons or promotions (34%) came next.
The rise in online food deliveries led to sales growth at mom-and-pop stores. But it is not actually free delivery services from the perspective of the app operators. Restaurants are charged with fees of 2,900 won per order for using Baemin and Coupang Eats apps.
By Sun A Lee
Suna@hankyung.com
Yeonhee Kim edited this article
