Woowa Brothers Corp., operator of the delivery app, apologized on Monday for causing controversy over the “open service” fee system. (Yonhap)
SEOUL, April 7 (Korea Bizwire) – The pending merger between the nation’s number one food delivery app Baedal Minjok (Baemin), and Yogiyo, the industry’s second largest player, has led to a growing negative public sentiment with widespread concerns about monopolistic behavior.
In particular, recent changes to Baemin’s fee system from a flat rate to a per-payment method has sparked controversy, raising concerns over such a monopoly.
Woowa Brothers Corp., operator of the delivery app, apologized on Monday for causing controversy over the “open service” fee system.
“Woowa Brothers humbly accept the criticism that we introduced the new fee system without considering the difficult situation of the restaurant owners, hit by the COVID-19 outbreak,” management said in a statement.
Starting this month, the delivery service will apply a 5.8 percent per-payment fee to restaurants for food orders made in under the new fee system open service.
Previously, Baemin changed the method of charging small businesses, saying it would help them.
The system is designed to charge 5.8 percent commission per order by reorganizing the current monthly fixed amount advertising system, which costs 88,000 won (US$71.90) per month.
This will result in 5.8 percent of sales being taken by Baemin as commission from this month.
However, small business owners say the changes are not for small businesses.
According to a commentary released by the Korea Federation of Micro Enterprise on Thursday, stores with monthly sales of 1.55 million won (US$1,267) or less are eligible for lower fees due to the new policy.
An employee of Baemin (Baedal Minjok) Rider. (Yonhap)
Some self-employed people raised the issue, saying that the fees paid to Baemin are excessive compared to the past.
Gyeonggi Province Gov. Lee Jae-myeong openly criticized the company, citing “the tyranny of monopoly,” targeting Baemin on his SNS account.
The controversy is continuing as politicians and consumer groups joined the campaign.
At the height of controversy, a recent survey showed that more than eight out of 10 consumers oppose the merger of Baemin and Yogiyo.
Consumers Korea said Monday that a survey of 500 adult men and women with experience using delivery apps showed 86.4 percent of the respondents opposed the merger.
The survey confirmed that the most frequently used delivery apps were Baemin at 59.2 percent and Yogiyo at 35.6 percent, amounting to 94.8 percent for the two companies combined.
The biggest reason for the opposition to the merger was, “food prices and delivery fees rising due to the formation of an exclusive market,” cited by 82.9 percent of respondents.
The decrease in incentives for business innovation or service improvement followed at 46.3 percent, reduction in consumer benefits such as coupons and events came in at 40.5 percent.
D. M. Park (dmpark@koreabizwire.com)
