[Delivery Market in Turmoil] ④ Uber’s Entry Further Reinforces Oligopoly—Can Public Delivery Apps Be an Alternative?

Membership-Based Competition Expected to Intensify

Coupon-Centric Policies Limit Growth of Public Apps

Editor's NoteThe domestic food delivery application market is on the verge of a seismic shift. Changes in the market environment have become inevitable, prompted by moves to legislate a service fee cap and regulatory measures against delivery platforms from the Fair Trade Commission. The industry leader, Baedal Minjok, finds itself at a crossroads as its ownership changes hands. Such upheavals in the delivery market will not only impact a single industry sector. Delivery apps are essential services used by more than 20 million people and are already deeply interwoven into daily life. In addition, complex issues are at play: the livelihoods of small business owners on the platform, ongoing debates about riders’ working conditions, and questions of consumer convenience. We examine how this shake-up in the delivery market affects each party and propose desirable policy directions for the advancement of the delivery industry.

① Can We Solve the Problem by Focusing Solely on Service Fees?

② Will Users Still Use Delivery Apps Without Free Delivery?... Consumer Convenience at Risk

③ Universal Regulations Threaten Riders’ Earnings... Where Is Delivery Quality Competition Headed?

④ A Stronger Monopoly with Uber Joining—Can Public Delivery Apps Truly Be an Alternative?

Competition in the delivery app market is expected to intensify as Uber replaces Delivery Hero as the parent company of Baedal Minjok, the number one operator. On September 22, the Fair Trade Commission began a pre-merger review related to this deal, officially kick-starting Uber’s acquisition of Baedal Minjok. Once the acquisition is completed in the second half of next year, Uber is expected to roll out more aggressive marketing tactics.

In this situation, closer attention is now on whether "public delivery apps"—previously discussed as an alternative to relieve monopoly and reduce platform fee burdens for small businesses—can truly fulfill their intended role. While the government plans to invest in the activation of public delivery apps, questions remain over whether they will be able to compete in a domestic market that is set to become even more of an arena for giant corporations.

As of September 28, according to government and industry sources, the combined market share of Baedal Minjok and Coupang Eats is estimated to reach a staggering 93%. Since its entry into the domestic food delivery market in May 2019, Coupang Eats has chased Baedal Minjok, maintaining a market share around 30%. When Uber begins full-scale management of Baedal Minjok in the second half of next year, competition for market share between Baedal Minjok and second-place Coupang Eats is expected to become even fiercer.

Uber vs. Coupang: Oligopoly Structure Could Grow Even Firmer

Intensity in membership-based competition is also expected to rise. Overseas, Uber has acquired users with "Uber One," a paid membership program bundling ride-hailing, food delivery, and grocery services. In Korea, Uber One is already being offered to Uber Taxi users, allowing them to accrue credits. This has fueled predictions that Uber will launch integrated membership services linking Baedal Minjok’s food delivery and quick commerce (B Mart) with Uber Taxi domestically.

The strategy aims for synergy by leveraging Baedal Minjok’s recognition and market share (with 24 million monthly active users) to drive up Uber Taxi usage. Baedal Minjok currently operates its own membership program called "Baemin Club," which is set for a revamp soon with enhanced accumulation benefits. On the other hand, Coupang’s "Coupang WOW," which bundles shopping, online video (OTT), and food delivery, has been instrumental in expanding its user base for Coupang Eats. Coupang Eats’ rapid growth has been anchored in its membership-based free delivery strategy. Should Uber’s strategy become clear, Coupang is expected to expand its own array of lifestyle services and intensify the battle for membership, seeking to boost usage of its platform. Ultimately, industry watchers forecast that the domestic delivery app market is unlikely to escape from an increasingly entrenched oligopoly dominated by Baedal Minjok and Coupang.

Public Delivery Apps: High Hopes, Persistent Limits

The government’s drive to strengthen public delivery apps is closely connected to the backdrop above, aiming to ease costs for small business owners and the self-employed. At the cabinet meeting last month, President Lee Jaemyung instructed officials to devise countermeasures for the delivery app monopoly situation, emphasizing the need for genuine competition. The Ministry of SMEs and Startups plans to focus support on the three to four most competitive public delivery apps, targeting a market share increase to 20%. According to the ministry’s budget plan for next year, KRW 120 billion will be designated for public delivery app consumer discount coupons, with KRW 4 billion allocated to promotional/marketing costs.

The problem is effectiveness. There are criticisms that public delivery apps may struggle to grow if the strategy relies mainly on discount coupons. Instead of relying on indirect subsidies such as coupons, structural ways to enhance the apps’ competitiveness must be found. In other words, public delivery apps must attract users regardless of incentives like discount coupons.

The fact that usage rates for public delivery apps are directly proportional to coupon issuance paradoxically reveals these apps’ heavy dependency on government support. For example, the number of users on Ttaenggyeoyo, which had been increasing through last year, has reversed and begun to decline this year. This is a direct result of the Ministry of Agriculture, Food and Rural Affairs issuing consumer coupons worth KRW 65 billion through a supplementary budget in June last year—the impact of which quickly waned. According to mobile index data from IGAWorks, Ttaenggyeoyo’s monthly active users fell to 2.25 million as of August this year, down by over 1 million from 3.55 million in December last year. During the same period, Mukkebi’s user count dropped from 670,000 to 490,000.

Professor Lee Jeonghee of Chung-Ang University’s Department of Economics commented, “When public delivery apps are supported with discount coupons from one-off budgets, usage increases but predictably falls off when support ends, and to truly attract users, sustained marketing is needed. Competitiveness can be strengthened by providing additional discounts using local currency that receives funding every year from the government budget. Once users gather, store owners will naturally follow.”

This content was produced with the assistance of AI translation services.