Delivery App Usage Declines After Social Distancing Lifted
Bank of Korea Says Inflation Rate May Exceed 4.7% This Year
[Asia Economy Reporter Heo Midam] After the COVID-19 endemic phase, sighs among delivery-only store owners have deepened. Over the past two years, delivery demand exploded due to social distancing measures and non-face-to-face effects, but since the quarantine guidelines were eased in April, delivery demand has sharply decreased. To make matters worse, soaring prices have led some owners to consider closing their businesses.
Recently, as outdoor activities have increased, the number of delivery app users has steadily declined. According to the big data analysis platform Mobile Index, the usage rates of major delivery apps 'Baedal Minjok', 'Yogiyo', and 'Coupang Eats' decreased by 8.2%, 17.2%, and 25.2%, respectively, from the first week of March to the fourth week of May. In contrast, during the same period, the usage rates of restaurant reservation apps 'Tableling' and 'Catch Table' increased by 61.7% and 26.6%, respectively.
During the pandemic period, prolonged quarantine measures dealt a direct blow to the sales of most self-employed individuals. According to the '2022 Ordinary People's Financial Life Report' published by Shinhan Bank in April, the average monthly business sales of self-employed people last year were 24.45 million KRW, down 2.66 million KRW (9.8%) from 27.11 million KRW in 2020. Compared to 33.94 million KRW in 2019, before the outbreak of COVID-19, it is 28% lower.
Accordingly, some self-employed individuals focused more on delivery and takeout services rather than in-store operations during the COVID-19 crisis to recover sales. However, as daily life has resumed in earnest, the sharp decline in delivery food demand has deepened the worries of store owners.
Citizens are also expressing dissatisfaction with delivery fees and are placing takeout orders or visiting stores directly. Jeong (26), an office worker living alone in Seodaemun-gu, Seoul, said, "When trying to meet the minimum order amount, even though I live alone, I have to order at least two menu items. Even eating alone costs over 10,000 KRW, and with delivery fees added, the price becomes burdensome, so I refrain from ordering delivery."
Meanwhile, soaring prices are also a burden for self-employed individuals. According to the Consumer Price Trends announced by Statistics Korea, last month's consumer price inflation rate was 5.4%, marking the highest increase in 13 years and 9 months since August 2008 (5.6%). The Bank of Korea also forecasted that the annual consumer price inflation rate might exceed the 2008 level of 4.7%, a possibility that cannot be ruled out.
As running stores becomes difficult, some self-employed individuals are considering closing their businesses. Recently, posts about transferring or urgently selling delivery-only stores have been continuously uploaded, especially in the self-employed community 'Because It's Painful, I'm a Boss.'
Self-employed person A, who opened a salad shop last year, said, "I opened a delivery-only salad shop during the COVID-19 period. At first, sales were better than expected, and customers left many good reviews, so I enjoyed working. But after the return to normal life, delivery sales dropped by more than 1 million KRW. Eventually, although it is a delivery-only store, we started accepting in-store orders as well. Delivery sales are the largest part of our business, so the decrease in delivery orders is worrying."
Experts predict that the delivery app market size will shrink in the future. Professor Eunhee Lee of Inha University's Department of Consumer Studies said, "With the lifting of social distancing measures, citizens are going out more. As a result, cases of buying and eating food outside have increased, while delivery demand has decreased. Also, with recent price increases, consumers are trying to reduce spending. They try to cut costs wherever possible, and delivery fees are a representative expense to reduce. Therefore, the delivery app market size is expected to shrink going forward."
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