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| A Coupang Eats delivery worker delivers food by bicycle to customers in Seoul in this undated file photo / Courtesy of Coupang |
By Kim Jae-heun
Coupang's push to go public on the New York Stock Exchange (NYSE), possibly as early as March, is raising jitters at Berlin-based Delivery Hero, which is preparing to grab a huge slice of Korea's burgeoning food delivery market by acquiring No.1-ranked Woowa Brothers.
What's at stake is the pole position in an intensifying race to be the top player in Korea's food delivery market, which was scaled at around $15 billion last year, coming in third after China and the United States according to market researcher Euromonitor.
Woowa Brothers operates Korea's largest food delivery service, Baedal Minjok (Baemin), which is in direct competition with Coupang Eats, a subsidiary of Coupang.
Last December, the German food delivery service firm decided to accept a conditional approval by the Korea Fair Trade Commission (KFTC) conditional to sell No.2 food delivery service Yogiyo to gain approval to acquire Baemin.
Back then, Coupang Eats just started food deliveries and accounted for a mere 1 percent share of the domestic market. The antitrust watchdog viewed that Delivery Hero could end up monopolizing the market here by owning both Baemin and Yogiyo, whose combined share of the market surpassed 90 percent.
Market watchers did not expect Coupang Eats to grow so quickly and become a threat to Baemin.
"We knew we were going to face a challenge by a new competitor in this market. Big companies like Amazon or DoorDash with ample capital can implement aggressive marketing and boost their slice of the pie. We witnessed such cases overseas and it was our plan to do the same in the Korean market by merging with Woowa Brothers," a Delivery Hero official said.
"Of course we appealed this to the KFTC back in September or October of last year when the agency was reviewing our acquisition deal, but Coupang Eats displayed explosive growth after the antitrust watchdog made its decision at the end of last year, so our claim did not carry much weight."
According to market researcher Nielson Koreanclick, Baemin accounts for 58.7 percent of the Korean food delivery service market as of last September, followed by Yogiyo with 30 percent and Coupang Eats with 6.8 percent.
Coupang Eats still has a long way to catch up, even with Yogiyo, but industry watchers say it will only be a matter of time before Coupang successfully debuts on the NYSE and raises trillions of won in capital to fuel its expansion.
"There are rumors that Coupang is expected to raise over $1 billion through its initial public offering and we can surely think some of the money can be invested into building up its food delivery business," an industry source said.
Woowa Brothers and Delivery Hero reportedly spent 200 billion won in marketing recently to promote their food delivery platforms. Coupang Eats is believed to have invested a similar amount or even more.
This year, Coupang Eats plans to expand its service across the country. It has only been available in the capital area so far. Coupang Eats started its service in Daegu last Tuesday and will open in Gwangju on Friday. In the first half of this year, people will be able to use Coupang Eats in all cities in the southeastern Gyeongsang provinces, central Chungcheong provinces, mountainous Gangwon Province, southwestern Jeolla provinces and on Jeju Island.
Coupang Eats said its IPO plans remain in effect, but declined to comment further.
