Rationalization vs Increased Burden... Baemin Commission Revision Imminent

Baemin "With commission reduction and restructuring, competition can be based on taste rather than financial power"
Some merchants "Sales were generated even with a fixed fee system, but switching to a percentage-based system will increase advertising costs"

[Asia Economy Reporter Kim Cheol-hyun] The overhaul of the advertising commission system for the delivery application 'Baedal Minjok' is just around the corner, but the gap between the company and the protesting small business owners remains wide. Woowa Brothers, the operator of Baedal Minjok (hereafter Baemin), states that the revision will lower advertising commissions and resolve the side effects of financially strong businesses monopolizing orders. On the other hand, some restaurant owners argue that since the advertising products will shift mainly to a percentage-based system and opportunities for fixed-rate product exposure will decrease, the overall advertising cost burden will increase. The outcome of this revision is expected to serve as a gauge for how the relationship between Baemin and small business owners will be structured going forward.

According to Woowa Brothers on the 30th, the Baemin fee system revision will be applied starting next month on the 1st. The percentage-based product 'Open List' at the top of the order screen will be changed to 'Open Service,' lowering the commission rate from 6.8% to 5.8%, a 1 percentage point decrease. The fixed-rate product 'Ultra Call' at the bottom will have its monthly price frozen at 88,000 KRW for three years. Additionally, the Open List method, which randomly exposed three businesses, will be changed so that all businesses that apply will be visible in Open Service, and Ultra Call will be limited to a maximum of three registrations per restaurant.

The point of contention lies in this change of exposure method. Baemin believes that with the expansion of the lower-commission Open Service area and the limitation on the number of Ultra Calls, the so-called 'flag planting' problem?where some financially strong restaurant owners register multiple Ultra Calls near their business to monopolize orders?can be resolved. This is expected to reduce burdens while creating a fair competitive environment. Moreover, Baemin explains that users' ordering behavior has shifted to browsing various pages within the app before deciding on food, making 'listing ads' within a specific category limited in effectiveness. The most effective method is exposure across multiple pages of the app with charges applied only when an order occurs. Kim Beom-jun, CEO of Woowa Brothers, also stated, "Until now, businesses that paid more money were repeatedly exposed at the top, but going forward, businesses that receive good evaluations and selections from users will be exposed at the top," adding, "From the business owners' perspective, this will allow them to focus on the restaurant's fundamental competitiveness?taste and price?rather than financial power."

Conversely, some small business owners are voicing concerns that Baemin's revision will increase advertising costs amid the already difficult situation caused by the COVID-19 pandemic. Until now, sales were generated solely through fixed-rate advertising, but with reduced exposure opportunities for Ultra Call and a shift to percentage-based fees, the amount payable will increase. In fact, for businesses that had many orders through just a few fixed-rate ads, switching to a percentage-based system could increase advertising costs based on simple calculations. Internet communities of restaurant owners have even seen movements to refuse applications for Open Service based on this. One restaurant owner said, "When you add VAT and external payment fees to the advertising commission, nearly 10% is deducted," and claimed, "The damage to already struggling small business owners will be significant." A Woowa Brothers representative explained, "We are continuously communicating and receiving feedback regarding the changes," and added, "Once implemented, more business owners will feel the effects."

This content was produced with the assistance of AI translation services.