Participants in the survey cited “excessive advertising” as the key problem with delivery service applications.(image: Yonhap)
SEOUL, Dec. 28 (Korea Bizwire) — Small business owners spend an average of 840,000 won (US$716) a month on online delivery service applications.
Of the money spent, half of it is spent on advertising via the application. Business owners want half of what they are spending on the application, 200,000 won, for advertisements.
This data is based on a study conducted by Research Lab on behalf of the Korea Federation of Micro Enterprise. The study was conducted by site visits to 1,000 small businesses.
Currently in South Korea, three major delivery service application are being used. These applications benefit from ordering and payment fees, advertising costs, and delivery costs. Advertising costs are now increasing.
Participants in the survey cited “excessive advertising” as the key problem with delivery service applications.
“Prompting excessive competition among businesses” and “lack of regulation on unfair process of the delivery service” were also mentioned as issues.
Though delivery applications might be seen as posing a burden, small business owners have no choice but to use them as their competitors also use them.
Other owners voluntarily joined the application to promote their business and its convenience.
Currently, small business owners pay 7.33 percent of their income for advertising. In anticipation of reducing such fees, 76.3 percent of the owners chose advertising as something that needed to be improved.
Delivery service is a huge market in Korea, estimated to be worth around 15 trillion won. Delivery services using applications generate three trillion won in sales annually, and will soon grow to be worth 10 trillion won.
The growth will continue as the number of single households and working parents increased. The convenience of shopping online will further add to this growth.
Small business owners are asking the government to step up to make standardized regulations to prevent excessive advertising fees, which the delivery service applications are taking advantage of.
D. M. Park (dmpark@koreabizwire.com)
