Delivery Fee Discount Competition... The Rise of Coupang Eats

Delivery Fee Discount Competition Intensifies from May
Coupang Eats, Ranked 3rd, Gains 440,000 Users in Three Months

The third-ranked delivery application (app) Coupang Eats is making significant strides in the 'delivery fee war' within the industry. In the discount competition among delivery app companies to retain users who have been leaving since the endemic (periodic outbreak of infectious diseases), Coupang Eats is showing remarkable results, surpassing the first and second places. It is evaluated that the competitiveness of Coupang Wow Membership, which has about 11 million subscribers, has also worked in the delivery app sector.

On the 11th, data company IGAWorks announced through Mobile Index that Coupang Eats' monthly active users (MAU) reached 3.41 million. Compared to 2.98 million recorded in March, this is a 14.6% increase. The number of users increased by 440,000 in just three months. Coupang Eats peaked at 7.02 million users in December 2021 but had been declining for over a year. Although there was a temporary rebound last December due to year-end party demand, it continued to decline afterward.

Coupang Eats created a turning point with a discount policy implemented from April this year. Coupang's paid membership, 'Rocket Wow,' members began receiving a 5-10% discount on Coupang Eats delivery fees. Since then, the number of users has increased for three consecutive months. Targeting Coupang Wow Membership subscribers seems to have been effective. By offering discounts on menu prices equivalent to the delivery fee burden to the active online shopping segment of Wow Membership members, they encouraged the use of delivery services through Coupang Eats. This strategy lowers consumers' delivery fee burdens while retaining loyal Coupang customers.

Industry leader Baedal Minjok (Baemin) has also been distributing 10% discount coupons since May, but its users have rather decreased. Last month, Baemin's MAU was 19.16 million, down 2.0% from 19.55 million in April. Although the decrease is not large, it marks a decline for two consecutive months. Baemin's 'Altteul Delivery' service, introduced as a delivery fee reduction measure, has yet to show results. Baemin completed applying this service to 25 districts in Seoul last month. While expanding nationwide, it is expected to take time to settle in the market as there are cases where delivery riders reject calls due to issues with the dispatch system.

Yogiyo also launched a subscription service 'YogipassX' in May, offering free delivery benefits, but like Baemin, it showed a decline for two consecutive months. Last month, Yogiyo's MAU was 6.63 million, down 0.8% from April.

Although Coupang Eats is making rare progress in the market, there are many concerns about this type of competition. Coupang Eats initially increased subscribers through aggressive discount promotions but then saw a rapid decline in users. Restaurant owners, already burdened by delivery app costs, are voicing complaints. According to a survey by the Korea Federation of SMEs targeting online platform vendors, 64.7% of delivery app vendors responded that costs are burdensome. An industry insider said, "For the delivery platform ecosystem, it is necessary to prepare fundamental delivery fee reduction measures rather than continuing discount competition."