Online Platform Fees Up to 35%... Average Monthly Advertising Cost Up to 1.2 Million Won

Korea Federation of SMEs 'Survey on Transactions of SMEs on Online Platforms'

It was found that online platform vendors bear commission fees of up to 35%.

The Korea Federation of SMEs announced on the 3rd the results of the "2024 Online Platform Vendor SME Transaction Survey," conducted from April 24 to June 12, targeting 1,103 SMEs operating on online platforms such as online shopping malls, delivery apps, and accommodation apps.

The survey subjects included Coupang, Naver, Gmarket, 11st, SSG.com, Musinsa, Baedal Minjok, Coupang Eats, Yogiyo, Yanolja, and Yeogi Eottae.

According to the survey, the average sales commission rate was 14.3% for online shopping malls and 11.5% for accommodation apps.

In the case of online shopping malls, vendors bear commission fees ranging from 0.0% to a maximum of 35.0% for brokerage and consignment sales transactions.

Accommodation apps showed reservation (brokerage) fees ranging from 8.0% to a maximum of 17.0%. Delivery apps disclose their commission fee structures on their websites, so they were not separately surveyed this time.

For direct purchase transactions by online shopping malls, the margin rate was found to be 27.1% of the sales price. Logistics costs were about 5.7% of the sales price.

The average monthly advertising expenses paid by platform vendors were 1,207,263 KRW for online shopping malls, 1,079,300 KRW for accommodation apps, and 107,780 KRW for delivery apps.

For accommodation apps, vendors spent an average of 822,200 KRW monthly on exposure advertising and 257,100 KRW on coupon advertising.

Regarding changes in perceived platform transaction cost burdens compared to the previous year, nearly half of the surveyed SMEs reported no change.

The responses indicating no change were 55.4% for online shopping malls, 54.5% for accommodation apps, and 45.7% for delivery apps. Those reporting a decrease were 33.3% for delivery apps, 22.4% for online shopping malls, and 21.0% for accommodation apps. Those reporting an increase were 24.5% for accommodation apps, 22.2% for online shopping malls, and 21.0% for delivery apps.

Meanwhile, the appropriate delivery range perceived by delivery app vendors was a radius of 3.1 km. By item, it was 3.9 km for raw fish and sushi (the longest range), 3.1 km for chicken and pizza, 2.9 km for Korean food, and 2.0 km for salads (the shortest range). This shows some differences compared to the basic advertising (exposure) radius of some delivery apps, which ranges from 1.5 km to 3 km.

The proportion of vendors who experienced unfair trade or wrongful acts during platform transactions in 2023 was 7.5% for accommodation apps, 5.3% for delivery apps, and 5.1% for online shopping malls.

The most frequently experienced types of unfair trade or wrongful acts (multiple responses allowed) were "unjust product returns" (48.4%) for online shopping malls, "setting or changing transaction conditions unfavorably without just cause" (62.5%) for delivery apps, and "coercion of unnecessary advertising or additional services" (40.0%) for accommodation apps.

Regarding the need for legislation such as the Platform Competition Promotion Act and the Online Platform Fairness Act to regulate unfair trade and wrongful acts by platforms, responses were highest for accommodation apps (74.0%), followed by online shopping malls (65.0%) and delivery apps (61.3%).

Vendors who supported legislation cited "strengthening public supervision" and "strong sanctions for violations" as necessary measures to ensure effectiveness.

Additionally, concerning platform transactions, the most frequently requested improvement across all three platform sectors was "reducing commission and advertising fee rates."

Choo Moon-gap, Head of the Economic Policy Division at the Korea Federation of SMEs, stated, "Compared to open markets and delivery apps, which have implemented voluntary regulation measures for a year since last year's first half, accommodation apps showed relatively higher experiences of unfair and wrongful acts and demands for legal regulation," adding, "It is now time to establish regulations that can be practically applied across the entire online platform market, including sectors not participating in voluntary regulation. We should consider a combined approach of legal regulations for minimum standards and voluntary regulations in which platforms participate voluntarily."