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Baedal Minjok and Coupang Eats' Increase in Delivery Costs. Who is it for?
  • By Jung In-hee, reporter
  • 승인 2022.03.28 06:52
  • 호수 302
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▲ Riders on Delivery (Source: Yonhap News)

The Domestic Delivery App Industry, such as Baedal Minjok and Coupang Eats, is undergoing a major overhaul of the fee system. The fee system between the delivery platform and the store company is changing, and the relay fee, which was fixed at 1,000 won per order, increased in conjunction with the order amount increase. As a result, controversy has arisen that the profitability of self-employed people who run delivery operations, has weakened and the burden on consumers has increased.

In the meantime, Baedal Minjok and Coupang Eats have been used by many people due to the fixed fee system. However, this time, Baedal Minjok and Coupang Eats are to be changed to a fixed rate system, which has been applied by other delivery platforms, such as Yogiyo and We Make Price O, instead of a flat rate sum system. In early February, Coupang Eats reorganized the order brokerage fee and delivery fee from the existing plan, which was fixed at 1,000 won per order and 5,000 won per delivery, so that store owners could choose the order brokerage fee and delivery fee. In addition, Baedal Minjok also reorganized its fee system beginning March 21. The basic rate plan alone is 6.8%, 0.7 percentage points lower than Coupang Eats, however, there is no significant difference.

Coupang Eats described the reorganization as, "A customized rate plan for commission reduction, to benefit entry-level companies." In addition, Baedal Minjok, launched a massive Public Relations Campaign, saying, "We have cut fees to the lowest level in the industry to ease the burden on entry companies." However, the response of the store companies was cold. An Official from the Restaurant Industry criticized, "The reorganization of the fee system is an increase, not a reduction in fees." It is pointed out that delivery platforms have started to raise brokerage fees to increase their profits, at a time when they are barely maintaining a stable income through increased delivery orders, instead of facing the reason that earnings have fallen sharply since the COVID-19 incident. As the arguments of the two sides are mixed, questions are being raised about who the fee reorganization is truly for and who it will monetarily benefit.

Coupang Eats' new Commission System is divided into: General Fee Type, Commission Saving Type, Delivery Cost Saving Type, and Delivery Cost Inclusion Type. Coupang Eats argued that if the fee type is selected according to the characteristics of each industry and store, the returns of the store companies can be maximized. However, contrary to this explanation, it was calculated that only for less than 12,000 won, delivery costs are cheaper than fixed fees only in the Delivery Cost Saving Type and Delivery Cost Inclusion Type. The rate system of Baedal Minjok was reorganized into three types: A Basic Rate System, A Delivery Cost-saving Rate System, and an Integrated Rate System. The larger the order amount, the greater the burden on the store companies, and like Coupang Eats, all delivery service platforms plans have a higher cost burden as compared to fixed fees, when ordering more than 12,000 won per order.

As a result, there have been concerns that stores, which have increased the burden of fees, will also raise food prices or increase consumer-paid delivery costs. Stores operating in the delivery app lamented, "The reorganization of fees in order to increase fees, is no different from tightening the breath of self-employed people at a time when the COVID-19 incident is mainly operating for delivery," adding, "We will have no choice but to stop delivering or raise prices for delivery menus." Another store complained, "We have been conducting a sales profit of 1,000 to 2,000 won per delivery, but if delivery app companies increase the fee in this instance, self-employed people like us, can no longer endure it," adding, "We have no choice but to charge more delivery costs to consumers or raise menu prices." As such, the reorganization of fees for Coupang Eats and Baedal Minjok, is rather a burden to store companies and consumers. Therefore, efforts are needed for delivery platforms to take some responsibility in consideration of the overall costs, such as brokerage fees and delivery costs of self-employed people.

By Jung In-hee, reporter  sugar3870@naver.com

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