Baedal Minjok has decided to gradually end the subscription advertising product 'Ultracall' starting in April. Since Ultracall is a major source of revenue for Baedal Minjok, the company will have to bear short-term losses if it abolishes this service.
Nevertheless, the reason Baedal Minjok is abolishing Ultracall is that its competitor, Coupang Eats, is closely pursuing it. Coupang Eats has been praised for improving delivery quality with its 'in-house delivery' service, which takes responsibility from order mediation to delivery.
In contrast, Baedal Minjok's Ultracall has been operating based on an 'order mediation' method. It is analyzed that by ending Ultracall, Baedal Minjok aims to focus on its in-house delivery service and solidify its position as the industry leader.
◇ Baedal Minjok focuses on in-house delivery after abolishing Ultracall
According to Mobile Index on the 11th, as of last month, Coupang Eats had 12 million monthly active users (MAU). This indicates a nearly twofold increase compared to 5.53 million during the same period last year. There was an increase of 390,000 users in just one month since last December (9.63 million).
Last month, the number of Baedal Minjok users was 22.61 million, maintaining an overwhelming lead in the industry. However, compared to last January (22.45 million), there was a decrease of 160,000 users. This is interpreted as Coupang Eats rapidly increasing its market share after launching free delivery services targeting Coupang membership users in March last year. The number of Coupang membership users has reached 14 million.
Another reason coupang Eats is rapidly growing is that it operates a 100% in-house delivery service. The in-house delivery service not only provides real-time tracking of rider routes and estimated arrival times but also boasts consistent delivery quality and speed.
In the global delivery market, in-house delivery services are also becoming a major model. DoorDash, a delivery app platform that only had a market share of just over 10% in the U.S. in early 2018, saw its market share rise to over 50% within two years after fully implementing the in-house delivery model in 2020. By the end of last year, this market share had increased to 67%.
On the other hand, Baedal Minjok has focused on an order mediation approach since its service began. When a user places an order through Baedal Minjok, the restaurant delivers the food using either its own staff or delivery service companies. Baedal Minjok does not intervene directly in the delivery process.
In particular, Baedal Minjok's Ultracall is based on an order mediation system. From the consumer's perspective, the order mediation method has the disadvantage of inconsistent delivery speed and unclear responsibility if problems arise. An industry insider noted, "With the growth of Coupang Eats, this structure appears to have reached its limits," adding, "As Coupang Eats entered the delivery app market, the in-house delivery market has quickly expanded, changing the competitive landscape toward an in-house delivery focus."
So far, Baedal Minjok has generated revenue by increasing the visibility of stores through Ultracall. Ultracall is a subscription advertising product that allows business owners to expose their stores to customers in specific areas and receive food orders by paying 88,000 won a month. By placing a 'flag' in the desired area, delivery service can be provided up to 3 kilometers in surrounding areas. A single store can also purchase multiple flags to cover a wider area. Thus, Ultracall has been a highly profitable product for Baedal Minjok.
◇ Competition between Coupang Eats and Baedal Minjok expands nationwide
As Coupang Eats gained popularity with its in-house delivery service, Baedal Minjok also launched its in-house delivery services 'Han-Jip Delivery' and 'Savvy Delivery' in quick succession. It has been operating both the traditional order mediation method and the in-house delivery method simultaneously. Consequently, the app's user interface has been evaluated as not being as intuitive and more complex than Coupang Eats.
In this regard, Baedal Minjok recently announced that it will overhaul its app UI along with the abolition of Ultracall. The plan is to consolidate the usage routes, which are divided between store delivery (via delivery service companies) and food delivery (in-house delivery), into a single food delivery tab. This aims to eliminate duplicate exposures by integrating store information.
In order to expand their market share, both Coupang Eats and Baedal Minjok are intensifying their efforts to target local markets. Coupang Eats had begun systematically introducing unlimited free delivery for Wow membership users starting in March last year and expanded this nationwide two months later in May. In October last year, it signed a business agreement with Changwon City in Gyeongsangnam-do to create a safe delivery environment, focusing on increasing its influence nationwide.
In response to Coupang Eats' free delivery, Baedal Minjok began offering free delivery from April last year. On the 4th, it expanded its membership service 'Baedal Minjok Club', which had only applied in Seoul, the metropolitan area, and five major cities, to nationwide coverage.
An industry insider said, "As Coupang Eats is expanding its in-house delivery influence nationwide, it seems that Baedal Minjok is considering various measures to keep up with this trend," adding, "It appears that Coupang Eats and Baedal Minjok, which previously competed with free delivery, have now entered 'round two' with their in-house delivery services."