Rising Delivery Costs Spark Abandonment of Apps and Fierce Market Competition

High Cost of Delivery Leads to Abandonment of Delivery Apps and Intensifies Market Competition

The high cost of delivery has resulted in the abandonment of delivery apps, leading to a contraction of the market and intensified competition, according to a report from Jtbc.

Decrease in Delivery App Usage and Market Size due to Rising Delivery Costs

The usage of delivery apps and the overall size of the market have decreased due to the rising cost of delivery, as reported by Jtbc. The COVID-19 pandemic has significantly reduced the number of delivery orders and the size of the delivery food market.

Impact on Restaurants and Consumer Behavior

Restaurants, such as one located in Seoul’s Mapo-gu, have experienced a drastic decrease in daily delivery orders. Previously, they received more than 10 orders during weekday lunch hours and even more on weekends. However, they now only receive 1-2 orders per day.

Consumers have also shifted their preferences. One consumer mentioned that they used to order delivery food about five times a month, but now it’s only 1-2 times. The consumer realized that dining out has become more affordable and enjoyable after the improvement in the COVID-19 situation.

Decline in Delivery Food Market and Increased Competition

The surge in online delivery food orders during the pandemic has experienced its first decline in history. In 2019, the transaction volume of delivery food did not reach 10 trillion won, but it increased to 26.6 trillion won due to the COVID-19 pandemic. Unfortunately, the growth trend halted as the transaction volume started to decline since last year.

This decline in transaction volume is the first decrease in six years since the statistics were compiled. Consumers have shown a preference for dining out rather than relying on delivery services. High inflation and interest rates have become a significant burden for consumers in terms of delivery costs.

As a result of the continuous decrease in demand for delivery food, competition among delivery platform companies has intensified, leading to market hemorrhage. Industry experts predict that this trend will continue, resulting in even fiercer competition among delivery platforms.

Conclusion

In conclusion, the usage of delivery apps and the overall size of the delivery food market have significantly decreased due to the COVID-19 pandemic. The decrease in consumer preference for dining out and the burden of high delivery costs have contributed to this decline. The intensified competition among delivery platforms will pose a greater challenge to the future of the delivery food market.