"Free Delivery but 1,500 Won More Expensive"... Consumers Suffer After All [Betrayal of Delivery Apps]

③Screams erupting from everywhere
Order surge causes 'delivery delays'
Baemin narrows store exposure radius to respond
Double menus appear, increasing consumer burden

The costs incurred from free delivery are primarily passed on to self-employed business owners and delivery drivers, ultimately resulting in harm to consumers. Self-employed business owners, burdened with high commission fees, respond by raising food prices, while delivery drivers, facing wage reductions, either leave the delivery industry or try to maintain their income by 'selectively accepting orders.'

Kim Jong-baek, a team leader at the Korea Franchise Industry Association, pointed out, "At first, it seems like the burden falls on the self-employed, but in the end, the damage inevitably circles back to the consumers."

From Cooking to Dispatch: '1 Hour 15 Minutes'

#Mr. Lee (35), who runs a pasta specialty restaurant in Yongin, Gyeonggi Province, had a frustrating experience last weekend. Around 2 p.m. that day, a customer placed an order, but for over an hour, no delivery driver was connected, and the order was eventually canceled. The customer called Mr. Lee's restaurant to complain about 'wasting time waiting for the food.' Mr. Lee said, "I apologized and issued a refund, but the store's reputation inevitably suffered. Even though our store is not responsible for the dispatch issue, customers think the problem lies with the restaurant, not Baemin. It feels like we are bearing the responsibility."

Bae Geon-woo (36), who runs a snack bar in Dongdaemun-gu, Seoul, took a total of 1 hour and 15 minutes from cooking to delivery on this day.
[Photo by Bae Geon-woo]

Dispatch delays are a representative problem that emerged after the introduction of free delivery. Self-employed business owners complain that it now often takes an hour from order to cooking due to free delivery, and consumer complaints have increased. Bae Geon-woo (36), who runs a snack bar in Dongdaemun-gu, Seoul, said, "I started using the new pricing plan (Baemin 1 Plus) in May, and in about a month, there have been over 10 order cancellations. Customers also ask me, 'Why is delivery taking so long recently?'"

The main cause of dispatch delays is the impact of free delivery. On the Baemin application (app), consumers can choose between two main delivery methods. One is 'Baemin Delivery (Budget Delivery / One-Home Delivery),' where Baemin is responsible for everything from mediation to delivery, and the other is 'Store Delivery,' where Baemin only mediates, and delivery is performed by delivery agencies contracted by the store owner (such as Barogo, Vroong, etc.). Among these, Baemin offers free delivery only to customers using Baemin Delivery.

As a result, customers flocked to Baemin Delivery, causing a surge in orders and a shortage of delivery drivers. Previously, orders were appropriately distributed between Store Delivery and Baemin Delivery, but after free delivery was introduced, orders concentrated on one side.

Hwang (35), who runs a chicken restaurant in Yangcheon-gu, Seoul, said, "Originally, the order ratio between Store Delivery and Baemin Delivery was about 7 to 3, with Store Delivery orders being much higher. But after free delivery, the situation completely reversed to about 1 to 9. We still use delivery agencies, but they hardly receive any Store Delivery calls," he lamented.

The situation worsened as delivery drivers' wages fell. According to the current system, delivery drivers' fees gradually increase over time. When a customer places an order through the Baemin app, nearby delivery drivers receive an 'order call' along with an initial fee offer. If the order is not dispatched within a certain time, the fee gradually increases from the initially offered rate.

Delivery drivers say they deliberately do not accept calls and respond with 'infinite waiting' to compensate for the lowered fees. Kim (39), who does delivery part-time in Gwangju Metropolitan City, said, "If the initial fee is 2,000 won, it increases to 2,070 won, 2,300 won, and so on over time. They reduced the fee from 4,000 won to 3,000 won, then to 2,000 won, so drivers don't accept calls and just wait. Lowering drivers' fees is worsening the delivery delay problem," he explained.

On the 6th, Kim Jun-hyung (34), who runs a chicken feet restaurant in Gangseo-gu, Seoul, had his store's exposure radius adjusted due to delivery delays and other reasons.
[Photo by Kim Jun-hyung]

Baemin is responding to dispatch delays by adjusting the 'store exposure radius' for self-employed business owners. According to Woowa Brothers, depending on weather, roads, and Baemin rider conditions, Baemin can arbitrarily adjust the store exposure radius for store owners. Previously, stores were exposed to customers up to 4 km away, but this range is reduced to within 2 km to arbitrarily control order volume.

As a result, self-employed business owners complain that they have recently received countless notifications that 'orders are restricted.' Mr. Lee said, "Orders are blocked even on clear days, not just rainy days, preventing delivery to perfectly fine stores. Baemin is responsible for not managing delivery drivers, but self-employed business owners are bearing the problem," he said.

A Baemin representative explained, "We flexibly adjust the store exposure radius from the basic 4 km only in some areas where delivery quality stabilization is needed" and "this is to provide more stable delivery services to store owners and consumers."

Consumers Bear an Additional 1,500 Won

This vicious cycle ultimately leads to rising consumer prices. Self-employed business owners raise menu prices one after another to cover losses from high commissions and delivery fees.

Mr. Lee recently raised all delivery app prices by 1,000 to 2,000 won above in-store prices. Previously, if a customer ordered two pizzas priced at 18,000 won each, they paid a total of 38,500 won including a 2,500 won delivery fee. Now, the same menu costs 20,000 won, so even with free delivery, customers pay 40,000 won, effectively paying 1,500 won more.

According to a November 2022 survey by the Korea Consumer Agency, among 34 fast food, chicken, and snack bars, 20 (58.8%) operated 'dual menus' with different prices on delivery apps and offline stores. Among 541 menu items with dual pricing, 529 (97.8%) were priced higher on delivery apps than in stores.

Jin Jeong-ho, chairman of the BHC Franchisee Association, explained, "In this structure, the choice is either to close the business or raise prices. Self-employed business owners have no choice. To endure the high commissions of delivery apps, they raise prices, which drives up all prices."

Series Outline

<1> Self-employed Business Owners Losing Money the More They Sell
<2> How Free Delivery Works
<3> Cries of Distress Erupting Everywhere
<4> Why They Have No Choice But to Use the 'New Pricing Plan'
<5> Superficial Fair Trade Commission Self-Regulation
<6> Expert Recommendations: Delivery Platform Regulation Measures

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