WeMakePrice drops per-order fees on food delivery app

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WeMakePrice drops per-order fees on food delivery app

The logos of WeMakePrice's delivery service app and Coupang Eats. [JOONGANG ILBO]

The logos of WeMakePrice's delivery service app and Coupang Eats. [JOONGANG ILBO]

 
E-commerce platform WeMakePrice is dropping commission fees for restaurant owners on its food delivery app.
 
According to WeMakePrice on Tuesday, its food delivery platform WeMakePrice O will not charge restaurant owners any additional commission fees. They still have to pay a flat monthly rate of 38,000 won ($32).
 
Until recently, restaurants registered on the app had to pay 5 percent commission fees for the orders they receive through the platform.
 
The platform has its own algorithm that recommends restaurants based on the number of orders and written reviews, as well as star ratings. No additional fee is required for this promotion.
 
WeMakePrice’s intention is to reach its break-even point with only the monthly fee they receive from restaurant owners.
 
“While other platforms try to expand their business in further categories and spend lots of money for advertising and marketing, WeMakePrice will only concentrate on connecting restaurants to customers,” said a spokesperson from WeMakePrice.
 
WeMakePrice’s revised charging system, which will go into effect in September, sets it apart from other delivery service apps in Korea.
 
Baedal Minjok, or Baemin, delivery bikes. [NEWS1]

Baedal Minjok, or Baemin, delivery bikes. [NEWS1]

 
Rival Baedal Minjok, more commonly known as Baemin, is currently running two different services with their own charging systems. 
 
Under the Open Service scheme, restaurants pay a commission for every single order placed on the service. Alternatively, restaurants can choose to opt in to the Ultra Call service, which charges a flat monthly rate of 88,000 won.
 
Delivery service Yogiyo charges a 12.5 percent commission on every order.
 
E-commerce giant Coupang’s food delivery service Coupang Eats is running a promotion where it charges a flat 1,000 won per order regardless of the total cost of the food. The promotion was set to run until the end of June, but the company has extended it indefinitely. Coupang Eats originally charged a 15 percent commission fee.
 
WeMakePrice’s revised charging system may be radical, but it remains a minor player in the food delivery market.
 
The three most popular delivery apps — Baemin, Yogiyo and Baedaltong — hold a combined market share of nearly 90 percent. Both Yogiyo and Baedaltong are operated by the local unit of Germany's Delivery Hero, and the Fair Trade Commission is currently reviewing the company's acquisition of Woowa Brothers, which operates Baemin.
 
Newer delivery companies are gaining ground. WeMakePrice O's total turnover in May grew 1,263 percent compared to the same month a year earlier. Its number of registered restaurants also increased by 739 percent. 
 
Seoul Metropolitan Government and Gyeonggi Provincial Government are currently working on a public delivery service app called "Zero Baedal Union." The app, which is set to enter the market in September, will only charge 2 percent commission fees to restaurants. The app will be designed in partnership with NHN Payco, a digital payment service from Naver.
 
“While many delivery service apps are suffering from financial issues, NHN Payco’s entry into the delivery service app market is considered a symbolic case as they are a well-financed company that is also determined to enter the retail market,” said Park Sung-ui, CEO of Real Retail Research. “With NHN Payco and the latecomers [who are expanding their presence in the market rapidly], a competition of [lowering] commission fees has already begun.”
 
BY CHU IN-YOUNG, CHEA SARAH   [chea.sarah@joongang.co.kr]
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