[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 (app) market is on the verge of a tectonic shift. Changes to the market environment are now inevitable due to legislative moves to cap commission fees and the Fair Trade Commission's regulations on delivery platforms. Baemin (Baedal Minjok), the industry leader, now finds itself at a crossroads as a change of ownership is underway. These seismic changes will not only impact a single sector. Delivery apps are now an essential service used by more than 20 million people, intricately woven into everyday life. Moreover, the issue of survival for small business owners partnering with the platforms, controversies around the labor conditions of riders, and the matter of consumer benefits are all interconnected complications. This series examines how the upheaval in the delivery market will affect each of these parties, and suggests desirable policy frameworks for developing the industry's future.

① Can the Fee-Focused Debate Solve the Real Problems?

② Will Consumers Still Use Delivery Apps Without Free Delivery? ... Consumer Benefits Under Threat

③ Industry-Wide Regulations Threaten Rider Fees ... Where Will Delivery Quality Competition End?

④ Uber's Arrival Further Reinforces Monopoly—Can Public Delivery Apps Be an Alternative?

Competition in the delivery app market is expected to intensify as the parent company of industry leader Baemin (Baedal Minjok) shifts from Delivery Hero to Uber. On September 22, the Fair Trade Commission began the preliminary review process for the proposed business combination, marking the full-scale start of Uber's acquisition of Baemin. If the acquisition is finalized in the second half of next year, Uber is likely to engage in even more aggressive marketing strategies.

Given this situation, attention is now focused on whether 'public delivery apps,' which have been suggested as a way to curb monopoly and lessen the commission burden on small business owners, can actually play their intended role. The government plans to inject funds to foster public delivery apps, but questions remain as to whether such platforms can remain competitive in a domestic delivery market dominated by major corporations.

According to the government and industry as of September 28, the combined market share of Baemin and Coupang Eats has reached as much as 93%. Since its entry into the domestic delivery market in May 2019, Coupang Eats has gained approximately 30% market share, steadily closing the gap with Baemin. When Uber fully takes charge of Baemin’s operations in the second half of next year, the competition for market share between the new number one and Coupang Eats—the runner-up—is expected to become even fiercer.

Uber vs. Coupang: Competition May Further Cement Market Oligopoly

Membership-based competition is anticipated to become particularly heated. Uber has been securing users overseas by bundling ride-hailing, food delivery, and grocery delivery under its paid membership program, 'Uber One.' In Korea, Uber is already running 'Uber One' for Uber Taxi users, allowing them to accumulate credits. This has sparked predictions that Uber will launch an integrated membership linking Baemin’s food delivery/quick commerce (B Mart) and Uber Taxi in the future.

This strategy aims to harness the brand power and high market share of Baemin, which currently boasts 24 million monthly active users (MAU), to expand the Uber Taxi customer base. Baemin already operates its own membership program, ‘Baemin Club,’ which is expected to be revamped soon to further strengthen rewards. Coupang’s ‘Coupang Wow’ membership—bundling shopping, OTT streaming, and food delivery—has also played a significant role in expanding the user base for Coupang Eats. Coupang Eats' rapid growth has largely been enabled by its membership-based free delivery strategy. If Uber's new strategies become clearer, Coupang is expected to expand its membership competition by tying in various lifestyle services to increase platform usage. As a result, experts believe it will be even more difficult to break away from a market structure where Baemin and Coupang dominate through oligopolistic control.

Public Delivery Apps: High Hopes, Persistent Limitations

The government’s drive to strengthen public delivery apps meant to ease the cost burden of small business owners and the self-employed is closely related to this backdrop. Last month, President Lee Jaemyung instructed the Cabinet to formulate measures for real competition in response to the monopoly in the delivery app market. The Ministry of SMEs and Startups has outlined plans to intensively support 3–4 of the most competitive public delivery apps, aiming to boost their market share to 20%. To that end, the ministry allocated 120 billion won in next year’s budget for public delivery app discount coupons, and an additional 4 billion won for marketing and promotional costs.

The challenge, however, is effectiveness. Critics argue that a policy focused on discount coupons has limited power to foster public delivery apps. Instead, there are calls to structurally improve the platforms’ competitiveness before relying on indirect subsidies like coupons. Ultimately, the platforms should attract users independent of artificial incentives such as coupons.

Ironically, the fact that public delivery app usage is directly proportional to the issuance of discount coupons points to their dependence on government support. For example, after peaking at the end of last year, user numbers for 'Ttaenggyeoyo' began to decline in 2024. This sharp drop followed the June 2023 issuance of public consumption coupons funded by a 65 billion won supplementary budget from the Ministry of Agriculture, Food and Rural Affairs—once the policy ended, so did the boost. According to Mobile Index by IGAWorks, the MAU of Ttaenggyeoyo was 2.25 million as of August of this year, a decrease of more than 1 million from 3.55 million in December 2023. During the same period, user numbers for 'MeokGaebi' declined from 670,000 to 490,000.

Professor Lee Jeonghee of Chung-Ang University’s Department of Economics stated, "When public delivery apps are supported with one-off budgets like discount coupons, usage increases temporarily but then falls once the support ends. Continuous marketing is needed to attract and retain users." She added, "It’s important to strengthen competitiveness by offering additional discounts through local currency programs with annual government funding. If users gather, business owners will naturally follow."

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