|In this 2017 file photo, Uber Eats' then Asia-Pacific head Allen Penn speaks during a press conference to launch its business in Korea. Korea Times file|
By Kwak Yeon-soo
The U.S. food delivery company Uber Eats has decided to pull out of Korea after two years due to mounting losses amid intensifying competition with home-grown players, the company said Tuesday.
Uber Eats, which will cease operations in Korea, Oct. 14, promised to provide "adequate services" to customers until then.
"After careful consideration, we've decided to discontinue our service in Korea as of Oct. 14," Uber Eats Korea said. "We'll focus on minimizing the impact on our restaurant partners, staff and fleet of riders."
The decision to withdraw from Korea comes at a time of intense competition in the food delivery sector, as home-grown companies push for greater scale and launch new services.
Korea is the world's fourth-largest market for online food orders. Koreans spend far more on food delivery than customers in other countries.
According to data from the Fair Trade Commission, Koreans placed 150 million orders a month on average last year. Payment via major delivery apps was estimated at over 4 trillion won ($3.4 billion).
Exiting Korea is an acknowledgement by Uber Eats that Baedal Minjok has emerged as the hard-to-beat leader in the notoriously difficult market.
Baedal Minjok, which has a market share hovering around 75 percent, launched a crowdsourced delivery service titled "Connect" in July.
Like Uber Eats, this service provides on-demand deliveries from restaurants and allows partners to become riders to deliver the food during peak periods.
In June, Korea's largest e-commerce firm Coupang joined the food delivery race by launching Coupang Eats.
"The decision is largely attributed to our failure to reach the performance we had expected in the beginning," an Uber Eats Korea official said. "However, Uber will continue its ride-hailing business in the country."
Uber offers high-end taxi-hailing and licensed taxi-hailing services in Korea. It discontinued a ride-hailing service using private cars in 2015 due to strong opposition from taxi drivers.
"Korea's food delivery market is already oversaturated," said Suh Yong-gu, a professor at Sookmyung Women's University. "Not only is it dominated by major players like Baedal Minjok and Yogiyo, but they are all rushing to roll out new services."
Uber Eats launched its business Korea in August 2017 and offered its services in Seoul and Incheon, and Seongnam, Gyeonggi Province. As of August, it had 2,400 restaurant partners.