Motorbikes for food delivery are parked outside an outlet of food delivery app Yogiyo in Seoul on June 2, 2020. (Yonhap)
SEOUL, Sept. 9 (Korea Bizwire) — Demand for food delivery service has surged following torrential summer rain and the coronavirus outbreak.
But food vendors are frustrated after delivery platforms decided to raise their commission fees last month.
Some experts argue that major e-commerce compoanies such as Coupang are responsible for heightening commission rates as they jump into the delivery market, particularly after Coupang introduced Coupang Eats this year, taking away a large group of delivery people by offering them better job benefits.
As increased commissions are posing a greater risk in business, small restaurant owners are looking for a way out, one of which is signing an exclusive contract with delivery drivers, which helps to reduce late deliveries and ensuing complaints.
“I’m left with nothing,” says a small restaurant owner.
Early this month, a delivery platform raised its commission rate from 3,500 won (US$2.95) to 4,500 won for all deliveries in some parts of Seoul. An additional 500 won is charged in extreme weather.
The restaurant owner, in the end, has to pay a total of 5,000 won to the agency. However, they are reluctant to charge more than 2,000 to 3,000 won to the customers for delivery, since it is seen as ‘extra charge’ and could lead to a drop in sales.
Nevertheless, some businesses are opting to raise their prices.
“We’ve decided to raise all menu prices by 500 won. Yes, sales have dropped, but we don’t have much choice,” said a local restaurant owner.
H. M. Kang (hmkang@koreabizwire.com)
