Endemic and Delivery Fee Burden Cause Delivery App Market Slowdown This Year
Baemin Performs Well Despite Overall User Decline...Improving Delivery System Using Technology
The delivery app market, which experienced explosive growth during the COVID-19 pandemic, has stalled for a year following the transition to an endemic (periodic outbreak of infectious diseases). However, despite an overall decline in delivery app users, the market leader Baedal Minjok (Baemin) showed only a slight decrease. While the second and third place apps, Yogiyo and Coupang Eats, are in a close contest, Baemin remains far ahead, not allowing the market dynamics to shift significantly. It is evaluated that Baemin's use of artificial intelligence (AI) technology to improve its delivery system, reducing delivery costs and enhancing user convenience, was a key factor.
According to data compiled by mobile index from data company IGAWorks on the 29th, the number of users (MAU) of the three major delivery apps?Baemin, Yogiyo, and Coupang Eats?last month was 29.28 million, a 2.5% decrease compared to the same period last year. Compared to the previous month, it decreased by 0.7%. The number of users for Baemin, Yogiyo, and Coupang Eats were 18.99 million, 5.69 million, and 4.6 million, respectively.
However, there were differences in user changes among the three companies. Baemin decreased by 3.9% compared to the same period last year. Considering that Yogiyo’s users decreased by 14.9%, Baemin performed relatively well. Coupang Eats, on the other hand, increased by 28.1%, which is a base effect due to a significant drop in Coupang Eats users during the same period last year. In November last year, Coupang Eats had lost 45.4% of its users compared to the beginning of the year. Considering that most users install multiple delivery apps and selectively use them when ordering, overall users decreased, but the impact varied by company.
Baemin managed to limit the decline in users even after the endemic transition. Baemin explained that this was because "the cost-saving 'Altteul Delivery' and AI-powered optimal delivery quality increased user satisfaction." Altteul Delivery is a service where Baemin directly handles delivery and performs optimal bundled deliveries based on delivery routes. A survey of restaurant owners who adopted this service showed that the average number of orders increased by 20% within one week after starting. In a survey by the Korean Society of Product Studies, 77% of respondents said that 'Altteul Delivery helps consumers save on delivery costs.'
Baemin explained that the efficient rider allocation in Altteul Delivery was possible thanks to the AI system. The AI uses information such as delivery time, pickup travel time, and cooking waiting time until the food is ready to predict how long it will take each rider to complete deliveries and optimally match deliveries. The AI also suggests the most efficient order for picking up and delivering multiple bundled orders.
Baemin has also integrated generative AI technology into its service. When users enter simple keywords like 'meals good for kids' or 'Friday late-night snack' instead of specific menu names or restaurant names in the Baemin app search bar, the AI analyzes accumulated reviews on Baemin and recommends highly relevant menus and restaurants. Lee Guk-hwan, CEO of Woowa Brothers, which operates Baemin, said, "There are about 30 AI services, including AI menu classification that reduces the burden on store owners and personalized AI recommendation services that analyze order history and behavioral patterns. We are investing heavily in technologies such as AI to streamline work processes and maximize customer experience."
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