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Coupang Eats rolling out free delivery for WOW members
2024-03-21
Coupang Eats, the third-largest player in Korea's food delivery market, is rolling out unlimited free food delivery for its 14 million paid members.
Effective March 26, Coupang WOW members will no longer have to pay delivery fees, the platform announced Monday, regardless of factors such as minimum order amounts, delivery distances, or order frequencies. Additionally, members will still be able to apply multiple discount coupons simultaneously.
The initiative aims to expand the company's market share by enticing more customers to opt for its free delivery subscription service over the traditional 10 percent discount on food prices with each order that was introduced in April 2023.
The free delivery will initially be available in major metropolitan areas such as Seoul and Busan, as well as in regions including Chungcheong, Gangwon, Gyeongsang, Jeolla, and Jeju Island. Coupang Eats plans to gradually extend the service to cover more areas in the future.
The free delivery service, however, is limited to "Save Delivery," for which multiple orders are picked up by a driver and delivered to neighboring houses simultaneously, and does not extend to "Direct Delivery" orders brought straight to individual households. Coupang Eats was the first food delivery platform in Korea to introduce the delivery of a single order to an individual house.
The move comes amid a decline in consumption on food delivery apps due to rising delivery fees and food costs. The online transaction volume for food delivery services dipped by 0.6 percent compared to the previous year, amounting to 26.4 trillion won ($19.8 billion) in total last year, according to Statistics Korea.
"By eliminating the hurdle of delivery fees, Coupang aims to alleviate the burden on consumers and provide restaurant owners with an opportunity to boost sales without additional cost pressure," the company said.
The decision is also seen as a direct challenge to Baedal Minjok, commonly known as Baemin, which holds approximately 60 percent of the domestic market share with 21.3 million monthly active users (MAUs) as of February. Yogiyo has 6.4 million MAUs and Coupang Eats trails closely at 5.9 million, according to the mobile market research firm Wiseapp, Retail, and Goods.
In addition to enhancing customer loyalty through free delivery, Coupang aims to leverage its WOW membership program to further lock in consumers by providing additional perks such as Rocket Delivery, Rocket Fresh, and the OTT service Coupang Play, available for a monthly fee of 4,990 won.
Despite the potential benefits, concerns linger among restaurant owners and consumers regarding the possibility of increased food prices in the future.
"Coupang has said that the free delivery policy applies to consumer-paid delivery fees, not those borne by restaurant owners, with a commission fee of 9.8 percent per order," noted an industry insider requesting anonymity. "If customers heavily opt for bundled deliveries, restaurant owners may find themselves under more pressure."
As of now, there are no indications that Coupang Eats' free delivery will be emulated by competitors like Baemin or Yogiyo.
"We've issued a continuous 10 percent discount coupon to all members," a Baemin official said. "While we're not contemplating free delivery at the company level, we remain vigilant toward industry trends."
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