"Delivery App Commission Cap May Increase Consumer Burden and Reduce Small Business Sales"

77.6% of Consumers Expect Higher Delivery Fees
Significant Decline in Usage Anticipated If Free Delivery Is Reduced

A recent survey found that imposing an upper limit on delivery application (app) fees could increase the burden on consumers and lead to a decline in sales for small business owners.

On December 26, the Korea Consumer Education Support Center released the results of a consumer perception survey on the use of delivery apps. The survey was overseen by Professor Emeritus Lee Eunhee, Head of Research at the Korea Consumer Education Support Center, and conducted by the online research agency Open Survey. It targeted 1,000 adult users of domestic delivery apps in their 20s to 50s, including 100 households with children. The analysis focused on perceptions of consumer burden if a fee cap is introduced, expectations for menu price reductions, the potential reduction of consumer benefits such as free delivery, and changes in usage behavior.

Reference image. Photo by Jinhyung Kang

The results showed that 77.6% of respondents believed that if a fee cap is implemented, the delivery fee directly paid by consumers would increase. In particular, this proportion rose to 82% among households with children, indicating that the burden from policy changes could affect certain consumer groups more significantly. Among those in their 20s and 30s, 61.7% responded that the fee cap would increase their burden, a higher rate than among those in their 40s (56.9%) and 50s (53.4%).

Additionally, 62.3% of respondents said that menu prices would not decrease if a fee cap were implemented, while only 6.7% expected a reduction in menu prices. On the other hand, consumers expressed concerns about increased delivery fees and the potential reduction of free delivery benefits resulting from the introduction of a fee cap. 58% cited the possible disappearance of free delivery as their greatest concern. The Korea Consumer Education Support Center explained that if consumers face higher delivery fees and the loss of free delivery, a decline in usage is inevitable, which in turn could lead to reduced sales for small business owners and contraction of the market.

Regarding changes in consumer behavior due to increased delivery fees, only 6% of households with children said they would dine out more often if free delivery were eliminated. In contrast, 86% responded that they would cook at home after grocery shopping or rely on convenience or ready-to-eat meals. This analysis suggests that artificial regulation of delivery app fees could lead to a "demand cliff" not only in the delivery app market but also across the entire dining industry, resulting in unpredictable side effects.

In response, the Korea Consumer Education Support Center called for: ▲an official consumer welfare impact assessment involving experts before introducing a fee cap; ▲the formation of a policy consultative body including key consumer groups such as young people, households with children, and riders, as well as other actual stakeholders; ▲refraining from pushing legislation forward without measures to address increased delivery fees for consumers and reduced free delivery or discount benefits; ▲and a comprehensive review of ongoing policies to ensure a balanced policy design that considers both the protection of small business owners and consumer welfare.

Professor Emeritus Lee Eunhee stated, "Consumers do not expect a fee cap to lead to lower food prices; rather, they are concerned about increased delivery fees and reduced benefits." "If consumer welfare and actual changes in consumer behavior are not thoroughly reviewed during the policy design stage, there is a risk of repeating the structural problem where a decline in consumer usage directly results in reduced sales for small business owners," she added.