[Asia Economy Reporter Kim Daeseop] The Korea Federation of Micro Enterprises criticized Woowa Brothers, the operator of 'Baedal Minjok,' for its commission policy reform, calling it an unprecedented unilateral steep increase in commissions.
In a statement released that day, the federation evaluated, "As of the 1st, Baedal Minjok's commission policy was revised, which means more than just an increased commission burden; it implies that micro enterprises' net profits will decrease accordingly while fixed expenses such as rent and labor costs remain unchanged."
The federation cited media reports, stating, "The new Baedal Minjok commission policy renames the existing 'Open List' to 'Open Service' and imposes a 5.8% commission on order transactions. The core change is shifting from the existing flat-rate 'Ultracall' system, which costs about 88,000 KRW per month, to a percentage-based system."
The federation argued that previously, a fixed amount was paid regardless of sales volume, but with the percentage-based system, stores with higher sales inevitably face increased commission burdens.
The federation explained, "Naturally, compared to the flat-rate system with a capped amount, the percentage-based system causes commissions to increase exponentially according to sales volume, placing a heavy burden on micro enterprises. For example, a store with monthly sales of 10 million KRW must pay 580,000 KRW, and a store with 30 million KRW in monthly sales must pay 1.74 million KRW." They added, "Previously, using Ultracall 3 to 4 times, one would pay about 260,000 to 350,000 KRW, but now they must pay tens to hundreds of thousands of won more in additional costs."
The federation also referenced the Ministry of SMEs and Startups' '2018 Micro Enterprise Survey Data.' According to the federation, "This data shows an average profit margin of 14.5% for micro enterprises. Considering this, even with 30 million KRW in monthly sales, net profit is 4.35 million KRW. While previously paying only 260,000 KRW for 3 Ultracall uses, now an additional 1.48 million KRW must be paid, reducing net profit to 2.87 million KRW. In other words, about 35% of net profit must be paid as additional Baedal Minjok commissions."
They continued, "According to media reports, the only sales bracket paying less commission under the new pricing policy is for monthly sales below 1.55 million KRW, which corresponds to daily sales of just 50,000 KRW. Most micro enterprises using delivery apps must endure a significant rate increase based on their sales volume."
The federation expressed concern over the burden on micro enterprises and strongly regretted Baedal Minjok's unilateral steep price hike.
The federation stated, "While there may be case differences, the important point is that this pricing policy reform effectively caused an unprecedented surge in commissions, adding fuel to the fire for micro enterprises already struggling due to the COVID-19 crisis. Despite Baedal Minjok's explanations, the essence of this situation is an 'unprecedented unilateral steep increase in commissions.'"
The federation requested an investigation by the Fair Trade Commission (FTC). It urged, "During the FTC's ongoing corporate merger review of Woowa Brothers and Delivery Hero, the commission should conduct a detailed investigation into Baedal Minjok's cunning price hike."
They added, "The FTC must thoroughly investigate and reflect these issues in the merger review process. In particular, we urge the FTC to actively gather opinions from stakeholders, including the Korea Federation of Micro Enterprises and micro enterprises using delivery apps, to make a wise decision."
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