Delivery fees rise, 1.7 million users quit... Delivery apps 'determined to recover'

Last Month, 23.1 Million Delivery App Users... 1.66 Million Fewer Than Previous Year

[Asia Economy Reporter Kim Cheol-hyun] The number of delivery application (app) users decreased by nearly 1.7 million over the past year. Users who had increased due to COVID-19 are gradually dropping off, compounded by soaring prices impacting the delivery market. Many users feel burdened by paying both higher food prices and delivery fees. Delivery app companies have started taking measures such as diversifying their businesses.

On the 13th, data company IGAWorks announced through Mobile Index that the number of delivery app users (MAU) on Android and iPhone (iOS) smartphones last month was 23.1 million. This is a decrease of 1.66 million compared to December 2021, a year ago. In other words, about 1.7 million users have left the delivery app market in one year.

Since many users install multiple delivery apps and use them selectively, the scale of user decline varies among the three major delivery apps. Last month, the number of users for Baemin (Baedal Minjok), Yogiyo, and Coupang Eats were 19.93 million, 6.91 million, and 3.84 million, respectively. Compared to the same period last year, Baemin saw a decrease of 810,000 users. The impact was greater for Yogiyo and Coupang Eats, with decreases of 2.14 million and 3.18 million users, respectively. Smaller platforms suffered a bigger hit.

The primary reason for the decline in delivery app users was the increase in outdoor activities such as dining out following the lifting of social distancing in April last year. Additionally, the recent surge in prices made users hesitate to click on delivery orders that require extra delivery fees. According to the Korea Consumer Agency’s comprehensive price information portal ‘Chamgagyeok,’ the average price of eight representative dining items in Seoul in December last year rose by up to 13.8% compared to January. Statistics Korea reported that the dining price inflation rate last year was 7.7%, the highest in 30 years since 1992’s 10.3%. Considering that restaurants usually set minimum order amounts for delivery menus, differentiating from in-store sales, the burden of delivery food prices has significantly increased.

Increases in delivery fees also accelerated user attrition. According to a survey on delivery fees conducted last month by the Korea Consumer Organization’s Price Monitoring Center, 23.7% of delivery fees rose compared to October. Some places raised fees by up to 4,000 won.

There is a growing sense of crisis in the industry that they cannot just watch user numbers decline. Each company is busy preparing countermeasures. Baemin, which managed relatively well last year, is preparing for a volatile market by appointing a new CEO, Lee Guk-hwan. CEO Lee, formerly the Chief Operating Officer (COO), played a key role in establishing quick commerce services such as B Mart and Baemin Store in the market. Starting from February, changes such as the introduction of ‘distance-based delivery tips,’ where business operators directly set and manage additional delivery fees based on distance, have been implemented.

Yogiyo has partnered with GS Retail this year to launch a service that allows customers to receive convenience store products anywhere nationwide within one hour after ordering. This expands the business by utilizing delivery infrastructure to enable immediate delivery of non-food items. An industry insider said, “Each delivery platform company is taking the decline in users seriously,” adding, “They are devising strategies that allow restaurants, users, riders, and other stakeholders in the delivery ecosystem to grow together.”