Food delivery platforms make changes to service models for survival

Yogiyo delivery bikes [Photo by Han Joo-hyung]

South Korean food delivery platforms are changing their service models to appeal to consumers who are increasingly forgoing ordering meals online due to an increased fee burden.

Baemin, one of the country’s leading food delivery platforms, has decided to introduce a new service called Thrifty Delivery, where a single rider can deliver to multiple locations simultaneously. Another food delivery platform, Yogiyo, is launching a new service that allows consumers to choose their delivery fees based on delivery times.

Yogiyo said on Monday its new personalized delivery service will be introduced to certain regions of the Seoul metropolitan area. Under the previous system, when store owners join Yogiyo, they can either choose the express option, where delivery was handled by Yogiyo, or choose to handle the delivery themselves. Consumers had no choice but to follow the delivery method chosen by the store. With the new service, however, consumers can choose between an express delivery, which may incur higher fees but will be faster and provide real-time tracking of the rider’s location, and the option to have the store handle delivery themselves, which may take longer but will be cheaper.

Baemin’s budget delivery service will be available from April 18 in some areas of Daegu, Incheon and Gyeonggi, before being rolled out nationwide. This service is designed to have multiple orders from nearby locations bundled together and delivered at once. The delivery fee for customers within 1km is about 2,000 won ($1.52).

Baemin delivery bikes [Photo by Han Joo-hyung]

These new services come in response to a growing trend of increased delivery costs and the transfer of these costs from restaurants to consumers. The rising cost of food delivery has led many restaurants to pass on the burden of their delivery costs to customers to save operational costs, resulting in the average delivery fee reaching around 5,000 won to 6,000 won even for short distances.

The new services are designed to address this issue by reducing delivery costs and offering consumers greater flexibility in selecting their preferred delivery options.

However, some critics argue that Baemin’s thrifty delivery is a way for the platform to push the burden of delivery fees onto restaurant owners and delivery drivers. Under the previous model, riders were paid a basic delivery commission of 2,500 won per order, with additional bonuses.

In contrast, the thrifty delivery model pays 1,200 won per pickup, 1,000 won per delivery and 80 won per 100m of travel, making it more difficult for riders to earn a decent income. If a rider delivers to three locations within a one-kilometer radius of a restaurant, the rider will only earn about 8,000 won before taxes.

The union of delivery platform workers already declared that they will go on strike on May 5 should they fail to reach a wage agreement with Baemin.