Plan for delivery fee support for small business owners gets mixed response

Industry

Published: 04 Jul. 2024, 18:08 Updated: 05 Jul. 2024, 11:24

Plan for delivery fee support for small business owners gets mixed response

A delivery worker parks his motorcycle in front of a cluster of restaurants in Seoul in February. [YONHAP]

A government initiative to subsidize small business owners’ delivery fees has been met with a mixed response among the intended beneficiaries. Some have welcomed the plan, which was devised to reduce the fees paid by owners to delivery apps, while some say it only benefits the delivery platforms and is not sustainable in the long run.

The initiative was announced Wednesday as part of the Yoon Suk Yeol administration’s 25 trillion won ($18.1 billion) comprehensive support plan for the self-employed and small business owners.

According to the government’s plan, a consultative body consisting of stakeholders including representatives from delivery platform companies and the restaurant industry will start discussions within July to come up with plans that are beneficial to all parties by the end of the year. The subsidies for delivery fees will be handed out next year. The consulting body will determine the eligibility criteria for receiving the subsidies as well as the amount.

There was a general sense of backing among those in the industry for the proposal that aims to support small-business owners.

“It was rough having to pay both commission fees and delivery fees to delivery app companies,” said the owner of a late-night food delivery shop in Gangseo District, western Seoul. “I want as many merchants as possible to benefit [from this plan].”

However, the owner also cautioned that “the support for delivery costs should not favor the delivery app companies."

A community of business owners formed out of concern over fair commerce platform usage issued a statement on Tuesday saying “the government’s initiative is an absurd suggestion that aims to profit delivery platforms by using taxes.”

“What the government and the opposing political party should be doing is regulating delivery platforms, not wasting taxes,” the group said.

Packaged food waits to be delivered at a restaurant. [NEWS1]

In response to such concerns, the government said it would look into the payment system implemented by the apps' operators, including the calculation of delivery and commission fees.

“The relevant ministries and industries will reconvene to inspect the matter after the Fair Trade Commission finishes its inspection and monitoring [of delivery app platforms],” Finance Minister Choi Sang-mok said in a joint ministerial briefing held at the Government Complex in Seoul on Wednesday. “We will look into ways to financially support genuine small business owners.”

Responding to a question on the amount of the delivery fee subsidies, he said that “an analysis on how the current structure [makes certain shareholders] bear the costs is first needed.”

Delivery app operators currently offer free delivery for customers who pay for the app’s membership. Coupang Eats started the policy in March by offering free delivery for Coupang’s WOW members, setting off a string of similar plans from its competitors.

Market share leader Baedal Minjok, commonly known as Baemin, introduced its own Baemin Club membership on May 28 that guarantees free delivery. While it is currently free, it will become paywalled from Aug. 20. Delivery app Yogiyo in April lowered the price of its Yogi Pass membership to 2,900 won per month from the initial 4,900 won to compete with the two others.

BY JANG JOO-YOUNG [kim.juyeon2@joongang.co.kr]