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| A delivery person for DoorDash rides his bike in the rain during the coronavirus pandemic in the Manhattan borough of New York City, Nov. 13. / REUTERS-Yonhap |
By Kim Jae-heun
A U.S. firm DoorDash and local e-commerce company Coupang are being seen as candidates to acquire Yogiyo, the No.2 player in the domestic food delivery service market.
"DoorDash and several other strategic investors such as Just Eat, Takeaway.com and Meituan Dianping, will have a chance to enter the Korean market with the cash and investments generated from other parts of the world they're operating in," an industry source said. "American firms especially have enough money to do so."
Yogiyo's value is estimated at around 2 trillion won, which is quite high for small- or medium-sized private equity funds.
For DoorDash, the Korean market is attractive for its test-bed characteristic. As the seventh-largest single market among OECD member countries, Korea has good buying power and information technology infrastructure.
Competition in American and Chinese markets is already too fierce and the Korean market is just right for testing new services, according to the source.
"Considering the symbolic characteristics and size of the Korean market, Yogiyo is definitely an attractive player for international investors," the source said.
Coupang is also seen as strong candidates to take over Yogiyo.
The e-commerce giant is already running Coupang Eats, which is No. 3 in the local market.
Acquiring Yogiyo will instantly elevate Coupang Eats to the No. 2 spot and help the online retailer expand its delivery service.
"The cost of Yogiyo is too high and there will not be many local candidates that can handle it. Coupang is not in a good shape financially now and it shouldn't be eyeing acquiring Yogiyo. However, it has always overturned market predictions and succeeded as a result," a source in the food delivery industry said.
Kakao also has potential to find Yogiyo attractive as it operates a reservation service for online food delivery on its platform. Over 6.5 million people are registered for the service as of June and the number is still increasing. It is just the matter of Kakao's willingness to enter the delivery service market.
Both Naver and Kakao could find it burdensome to start a food delivery service as it means doing business with small business owners directly. One issue related to commissions or the mismanagement of delivery workers could deteriorate the company's image and affect its main business.
The country's largest retailer, E-mart, owned by Shinsegae, could create good synergy with Yogiyo but it does not have enough cash.
"E-mart is currently expanding its online business aggressively and a food delivery player could play a critical role with its fulfilment business too," the source said. "However, as far as I know, the company does not have 2 trillion won in cash flow to acquire Yogiyo."
However, not all global food delivery services and strategic investors will jump at Yogiyo as they are backed by the same investors.
Uber, Grab, DoorDash and Zomato receive money from SoftBank while shares of Meituan Dianping, Delivery Hero, Just Eat and Takeaway.com are directly or indirectly owned by Naspers, a South African investor.
Korean internet giant Naver wholly owns Japanese food delivery player Demae-can and Alibaba is the sole owner of Chinese firm Ele.me.
So which firm bags Yogiyo depends on their major shareholders, who must be consulted before any action is taken.
