Woowa Brothers, Delivery Hero fear emerging competition

Baedal Minjok's delivery person rides on scooters to deliver food on June 22. / Korea times file

By Kim Jae-heun

Coupang Eats is a hot potato in the food delivery service market now. Backed by massive capital from SoftBank Vision Fund, Coupang has made aggressive investments in its delivery platform business, inducing a cutthroat competition with its rivals ― Yogiyo of Delivery Hero and Baedal Minjok (Baemin) of Woowa Brothers.

Since its business launch in May last year, Coupang Eats has been offering various promotions to recruit delivery drivers.

However, there is a limited number of drivers in the employment market and it had to steal those who worked for Yogiyo or Baemin.

It set no fixed price for delivery fees and has been paying three to four times higher labor costs on the basis of travel distance, weather condition and delivery location.

"There is no fixed price we pay to delivery drivers. Our payment system works completely dependent on the needs and supply of the market. In the rainy season or peak time for lunch or dinner, delivery cost rises very high," a Coupang official said.

Coupang Eats drivers set a new record to earn 23,000 won per order in southern Seoul's posh Seocho-gu, recently. It was raining and calls for food delivery soared in the region.

"We receive 5,000 won from restaurant owners per order and we give the whole money to drivers or sometimes more depending on the situation," the official added.

This led drivers to shun calls from other food delivery service firms and only take orders for Coupang.

The No.2 delivery player Yogiyo, operated by Delivery Hero, pays 6,000 won to drivers per order they deliver. But because Coupang Eats pays more on average, it has decided to raise the delivery fee to 8,000 won.

The No.1 player Baedal Minjok, operated by Woowa Brothers, has also started a promotion to give financial benefits to riders by paying an extra 1,500 won to 2,000 won depending on the travel distance or weather condition.

"Because the entry barrier for the food delivery platform business is so low, the market is very competitive and it is a matter of time for latecomers to beat us if they do everything with money," a Woowa Brothers official said.

This competition is only benefiting drivers though, and consumers are seeing increased costs by paying part of the raised delivery fee with restaurant owners.

For the 3,000 won to 5,000 won delivery fees that are given to drivers, some restaurants make customers pay a certain amount. But customers can choose to select between restaurants with higher prices and no delivery fees or cheaper food with delivery costs.

Coupang Eats is restricting its drivers to take only one delivery at a time. This way, customers can receive their orders faster than when they place orders with Yogiyo or Baemin.

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