Delivery Commerce? Strong Performance Led by Budget Delivery Services
Woowa Brothers, the operator of 'Baedal Minjok,' recorded profits for two consecutive years.
Woowa Brothers announced on the 29th through a public disclosure that last year, on a consolidated basis, it achieved sales of 3.4155 trillion KRW and an operating profit of 699.8 billion KRW. Sales increased by 15.9% and operating profit grew by 65% compared to the previous year.
The strong performance of Woowa Brothers is analyzed to be due to the commerce business, including Baemin B Mart, which has been continuously invested in and has borne fruit, and new services such as Altteul Delivery that reduce consumers' delivery fee burden, successfully securing and retaining users compared to competitors.
Among business sectors, product sales increased by 34% year-on-year to 688 billion KRW, driving growth in the commerce business segment such as Baemin B Mart. As of last year, Baemin B Mart operates about 70 urban distribution centers in Seoul, Gyeonggi, Busan, Daegu, Ulsan, Daejeon, and Cheonan. The number of product types is approximately 10,000. In particular, the average customer order amount at B Mart last year increased about threefold compared to the early stages of the business, contributing to improved profitability. The growth of the commerce business is also analyzed to have significantly contributed to the improvement of operating profit. Not only did Baemin B Mart succeed in reducing losses, but cost-saving effects such as transportation and storage expenses were enhanced through logistics process efficiency, impacting profit margin improvement.
Service sales, including food delivery businesses such as Baemin Delivery and store delivery, grew by 12.2% to 2.7187 trillion KRW compared to 2.4233 trillion KRW the previous year. Amid fierce market competition surrounding self-delivery, where the delivery app is responsible from order to delivery, Altteul Delivery, introduced in April last year, led the growth in service sales and operating profit. Altteul Delivery is a self-delivery service that performs bundled deliveries along optimal routes, lowering delivery tips and increasing order volume even after the endemic phase. According to Baemin, the number of orders from stores subscribed to Altteul Delivery increased by an average of 20% compared to before subscription.
It is also evaluated that Baemin's diverse advertising products such as Ultracall and Open List, which expand options for restaurant owners compared to competitors, greatly contributed to performance improvement. According to Woowa Brothers, the number of restaurants listed on Baemin increased by about 20,000 from approximately 300,000 at the end of 2022 to about 320,000 at the end of last year.
Additionally, efforts to improve cost efficiency, such as the termination of live commerce Baemin Shopping Live, withdrawal from the Baemin business in Vietnam, downsizing of the Baemin Sanghoe direct purchase business, and establishment of the central logistics center Incheon base, are also analyzed to have contributed to the increase in operating profit. Cost reductions in service fees and commission payments also supported the improvement in operating profit. On the other hand, marketing expenses such as coupon issuance and delivery processing fees paid to riders increased compared to the previous year. The company explained, "The effects of previous investments focused on securing store partners, building self-delivery infrastructure, and acquiring various marketing products occurred simultaneously with cost reductions through business structure efficiency, contributing to the expansion of operating profit."
Opinions on this year's performance outlook are divided. In fact, the sales growth rate, which had nearly doubled annually for three years from 2018, slowed to 46.7% in 2022 and 15.9% last year. Competition in the delivery industry continues to intensify. A Woowa Brothers official said, "Active investment in the delivery commerce business and realizing reasonable customer delivery tips through Altteul Delivery had a positive impact on performance," adding, "We will continue to strive to provide better services to both restaurant owners and customers."
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