[Initial Insight] The Battle Between Baemin and Coupang Who Forgot Coexistence

Kim Cheol-hyun, Deputy Director, Bio Startups and Ventures Division

The battle between Baedal Minjok (Baemin) and Coupang Eats is intensifying. The spark was ignited by the ‘dual pricing system’ practiced by large franchises and some restaurants. Coupang Eats publicly accused Baemin of causing these businesses to charge higher prices for delivery food than for in-store dining. Baemin, offended, rebutted by saying that Coupang Eats is misleading public opinion. Judging by the current situation, there is a strong possibility that this dispute could escalate into a legal battle.

Both sides’ claims are sharply opposed. On the 24th, Coupang Eats stated through the Coupang Newsroom that they do not pass on delivery fees, which are a burden to customers due to free delivery, to business owners or consumers. They added that the ‘dual pricing system’ is attributed to a specific delivery company shifting the cost of free delivery onto restaurant owners and raising commissions. That specific delivery company is Baemin. The logic that Baemin is responsible because the franchise industry cites commission increases as the reason they have no choice but to apply dual pricing seems plausible at first glance, especially since Baemin recently raised its own delivery commission.

Let’s look at Baemin’s rebuttal. Although Baemin recently raised its own delivery commission to 9.8%, this is the same as Coupang Eats, and the delivery fees borne by business owners are also identical. However, Baemin offers a ‘store delivery’ product, which Coupang Eats does not have, where business owners autonomously contract with delivery agencies for deliveries. In this case, the business owner directly sets the delivery fee shared with customers, and the commission has been maintained at 6.8%. If free delivery is chosen, Baemin supports the delivery fee by paying 2,000 KRW per order. Baemin’s position is that Coupang Eats distorted the facts by mixing this store delivery with their own delivery. Although the situation is complex, a detailed examination shows that it is not a matter of one side being right or wrong. Both companies competing in an open market base their arguments on facts. They simply emphasize what benefits them and downplay what does not.

The core issue is not about who is responsible for the dual pricing system. Even without this controversy, the two companies would have inevitably clashed. This is not the first time. The beginning dates back to 2019 when Baemin was sold to Delivery Hero. At that time, Baemin cited ‘the fierce challenge from Company C backed by huge Japanese capital’ as the reason for the sale. Company C is Coupang. The rivalry has continued, and this year they clashed over the ‘most-favored-nation’ clause, which requires prices on delivery apps to be set lower or equal. When the Fair Trade Commission announced an investigation into Baemin’s alleged demand for most-favored-nation treatment from partner stores, Baemin responded that the demand was first initiated by their competitor (Coupang Eats) and that they had no choice but to respond since no sanctions were imposed on that.

The reason Baemin is so sensitive to Coupang Eats is due to Coupang Eats’ rapid growth. Last month, Coupang Eats’ monthly active users (MAU) reached 8.1 million, a 99.2% increase from the previous year. Coupang Eats’ expansion strategy has also changed the market. Initially, they promoted single delivery, where a delivery person delivers to one household at a time, followed by subscriber-targeted discount promotions, and this year they even ignited a free delivery competition. Although Baemin is the number one company, it has been trailing Coupang Eats in single delivery, free delivery, and subscription services. Ultimately, the essence is a fierce offensive by a latecomer and a market share battle by the incumbent to defend its position.

The problem is that restaurant owners, a key pillar of the delivery ecosystem, have been sidelined in this process. The sluggish progress of the government-led win-win cooperation body between delivery platforms and partner stores is evidence of this. The goal is to reach a conclusion by next month, but no substantial win-win measures such as commission rate reductions have emerged. It is now time to shift from a cutthroat competition for market share expansion to a cooperative competition for the sustainability of the delivery ecosystem.