War of Food Delivery Apps Gets Under Way | Be Korea-savvy

War of Food Delivery Apps Gets Under Way

Yogiyo said on November 13 that its service charge is 12.5 percent of the food bill. (image:Yogiyo)

SEOUL, Nov. 14 (Korea Bizwire) — Food delivery app service providers are waging a fierce battle surrounding how much they charge to food establishments. Recently, Yogiyo accused its rival Woowa Brothers Corp., the company providing the “Nation of Delivery” service of improper advertising to the Fair Trade Commission.

In addition, it filed a complaint with the court for an injunction order to stop Woowa Brothers advertising falsehood on its website, mobile app, blog, and social networking pages.

Yogiyo said on November 13 that its service charge is 12.5 percent of the food bill. According to the company, it has started charging the uniform fee of 12.5 percent to all new members except a few franchises effective on October 1. The company added that for some of the restaurants it reduced the charge to 12.5 percent from early October.

This is the first time for Yogiyo to reveal its service charge policy in public. A Yogiyo official said, “Even before the announcement our average service charge was 12.6 percent. As many as 91 percent of all merchants have signed up with us at less than 13 percent of service fee.”

Earlier in September, Woowa Brothers said in its promotional materials, “The fees charged by Nation of Delivery is just a half of what it is with other rivals,” implying its fee level is 5.5-9.0 percent. Adding credit card and other small payment service charges as well as taxes, the final fee would be 13.8 percent. The problem was with the figures of Yogiyo.

The materials stated that “Company Y” charges fees of 11-20 percent, as well as separate credit card processing fees and value-added taxes. If this is true, Yogiyo’s service charge must be higher by 20 percentage points than Nation of Delivery’s. This is what made Yogiyo angry and made it go to great lengths to fight for it.

A Yogiyo official said, “Because of false promotion run by other delivery app service company, our image in the market was tarnished and the public have been misinformed about our service. Nation of Delivery charges lower fees while imposing advertising commissions instead. Without accounting for this, comparing delivery charge alone is a gravely unfair treatment.”

Another delivery app company BD-Tong said earlier, “Our merchant number has surpassed 200,000 in September, the highest among all delivery app firms.” It could achieve the milestone by offering a low service charge of 8 percent to restaurant operators in the three categories including fried chicken, Chinese, and Korean food.

According to its own counting, the number of merchants registered with Nation of Delivery and Yogiyo are 130,000-140,000 and 40,000, respectively, which leaves wide room for dispute by other rivals.

It remains to be seen how the fight among the three companies will unfold. Even though the three service providers, Nation of Delivery, Yogiyo, and BD-Tong, are taking 90 percent of the market, there is no telling which is dominant. That’s because they keep putting out exaggerated ads and accusing others of false claims.

By M.H. Lee (mhlee@koreabizwire.com)

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