Ministry of SMEs and Startups allocates 124 billion won for cooperative delivery app support

Three to four public apps to be selected for concentrated funding; 97% earmarked for discount coupons

Retaining users after coupons expire remains key challenge

A delivery rider waits for an order. [Yonhap]
A delivery rider waits for an order. [Yonhap]

The government plans to invest 124 billion won ($90.3 million) next year to develop public online food delivery platforms, aiming to curb the dominance of private delivery giants and ease the burden on small business owners. The Ministry of SMEs and Startups intends to select three to four competitive public delivery apps from across the country for concentrated support. The key question, however, is whether the initiative will have a lasting effect: about 97 percent of the budget — 120 billion won — is set to go toward consumer discount coupons.

According to the ministry's 2027 budget proposal released Tuesday, the Ministry of SMEs and Startups has created a new "cooperative delivery app support" project and allocated 124 billion won to it. The initiative is designed to break the oligopoly of private delivery platforms and develop public delivery apps into platforms that consumers, merchants and riders will want to use.

Not every public delivery app will receive funding, however. The ministry plans to evaluate apps currently operating nationwide on criteria including public benefit and market viability, then designate three to four as "cooperative delivery apps" eligible for concentrated support.

The ministry will issue a selection announcement this month, choose the cooperative delivery apps around November and sign agreements in December, with budget support beginning next year. The evaluation will assess not only public-interest factors — such as commission rates charged to small business owners and commitment to cooperative practices — but also market-oriented criteria including plans to expand market share and ease of use.

The main concern is that the bulk of the budget is directed at consumer discounts. According to the detailed plan the ministry presented at a budget briefing Monday, 120 billion won of the 124 billion won total will go toward consumer discount coupons, with the remaining 4 billion won allocated for promotion — meaning roughly 97 percent of the entire budget is earmarked for coupons.

Some critics argue that discount coupons alone are insufficient to sustain the growth of public delivery apps. The concern is that even if coupons attract users in the short term, usage rates may not hold once the fiscal support ends.

The ministry maintains that a degree of effectiveness was demonstrated through a similar discount support program previously run by the Ministry of Agriculture, Food and Rural Affairs. After the agriculture ministry invested 65 billion won in six months of support, the market share of public delivery apps rose from 6.5 percent to 11 percent. That share has been gradually declining since the support ended, however.

"It didn't drop off immediately after support ended — there was a lock-in effect, so it has been falling slowly," Lee Eun-cheong, director general of the ministry's cooperative partnership policy bureau, said at the briefing. "We don't think discount coupons alone will keep driving up market share."

In response, the ministry plans to pursue measures to strengthen the apps' own competitiveness alongside the coupon program. The strategy includes attracting popular restaurants to the platforms and linking them with local currency and Onnuri gift vouchers to retain users.

Although not included in the current budget proposal, the ministry also plans to develop support measures for delivery riders. While the ministry has set a direction of building cooperative delivery apps into platforms that riders, as well as consumers and merchants, will want to use, specific support measures are to be pursued for inclusion during the National Assembly's budget deliberation process.

The government's push to develop public delivery apps is also driven by concerns over the oligopolistic structure of private delivery platforms. President Lee Jae-myung raised the issue of monopolistic practices in the delivery app market at a Cabinet meeting Aug. 25, calling for the creation of a genuinely competitive market.

Ultimately, the success of next year's public delivery app initiative will likely hinge on how long the platforms can retain users drawn in by large-scale discount coupons. The ministry itself acknowledges that coupons alone will not be enough to sustain market share gains, and plans to pursue complementary measures — including expanding merchant participation and linking payment options — to build lasting competitiveness.


boo@heraldcorp.com