People in Korea have long enjoyed convenient food delivery services, ordering in almost all types of food from burgers and fried chicken to jajangmyeon (black bean noodles) and pig’s trotters.
Combined with mobile technology, the food delivery services are gaining further traction as more start-ups come up with applications catering to the different tastes of customers and attracting investments.
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A customer makes an order through the Yogiyo food delivery app. Yogiyo |
Baedal Minjok, the largest food delivery app here with its monthly users standing at 2.7 million in June, has been going all-out to maintain its lead in the market, deploying aggressive marketing strategies, such as forgoing commission fees from restaurants and increasing their budget for TV advertisements.
The company used to take 5.5 percent to 9 percent of each sale from the restaurants as a commission fee, which accounted for around 30 percent of the company’s sales revenue.
Not to be outdone, Yogiyo, the runner-up in the market, has also stopped charging commission fees from restaurants registered on the app.
The efforts to reduce commissions are aimed at securing the upper hand in the face of growing competition, according to market watchers.
“As more companies, such as mobile messenger operator Daum Kakao, are rumored to jump into the food delivery app market, competition will likely heat up further down the road,” said a market analyst who wished to be unnamed.
Of the entire 12 trillion won ($10.3 billion) food delivery market, the market for mobile delivery services takes up 1.7 trillion won, or around 14 percent, and is anticipated to grow to 2 trillion won this year, according to the Ministry of Food and Drugs Safety.
Those upstart delivery businesses are also luring foreign investments.
Most recently, German online food-ordering service operator Delivery Hero decided in August to invest 41.9 billion won in Yogiyo.
The entire investments the Korean firm has received so far, including the one from the German firm, total 65.9 billion won, the most in the industry.
RGP Korea, the operator of Yogiyo, said it would try to draw more investments from global investors to expand its businesses.
“Yogiyo will try to leverage those investments in conducting R&D and launching new services,” an RGP Korea official said.
As the mobile delivery app market is becoming packed with “me-too” services, some market players are trying to appeal to customers with differentiated services.
Yogiyo has started its takeout service, which allows customers to order food with their mobile phones and pick it up at the restaurants in person.
After recent backlash over bad sanitation of some restaurants working with mobile food delivery businesses, Yogiyo and mobile food delivery service Baedal Tong have been conducting on-site sanitation inspections at restaurants together with sanitation firms such as Cesco.
Delivery Hero is the largest shareholder of Baedal Tong.
Bootake (meaning “please” in Korean), developed by start-up Mesh Korea, delivers food from popular dining places that do not run door-to-door delivery services, as well as groceries from other shops on behalf of users.
By Kim Young-won (
wone0102@hearldcor.com)
