Commission Revision Canceled... Three Remaining Challenges for Baemin

① Appropriate Commission Fee ② Flag Planting ③ Performance Improvement

[Asia Economy Reporter Kim Cheol-hyun] Woowa Brothers has completely scrapped the commission revision plan for the food delivery application 'Baedal Minjok (Baemin)', but it is expected to face a very different management environment from before the controversy. Although the controversy has settled, the company now faces several challenges that must be resolved in operating the business. Having abandoned the revision plan prepared over several months, and with social attention focused, it is expected that establishing an appropriate commission policy will not be easy. Since the previous commission system also had exposed problems, it cannot simply be left as is. It may also take considerable time to recover the damaged image caused during this controversy.

Baemin is currently working on reverting to the 'Open Service' system introduced on the 1st of this month. The previous system randomly displayed three businesses through the 6.8% flat-rate commission product 'Open List' at the top of the order screen, and the monthly fixed-rate product 'Ultra Call' priced at 88,000 KRW was listed without limit on the bottom. Returning to the previous system will resolve the recent controversy and conflicts. However, the process of creating a new commission system going forward is expected to be challenging. Woowa Brothers announced that major policy changes will be decided through communication by forming consultative bodies with business owners. In response, the Korea Federation of Small and Medium Business emphasized that consultations should involve related organizations and actual users, not just company-led consultative bodies. Considering that the current revision plan was also disclosed in early December last year and went through about four months of communication before falling through, reaching consensus in future major policy decisions is expected to be difficult. Moreover, although domestic competitors and major global platforms operate mainly on a flat-rate commission basis, Baemin will find it difficult to easily bring up the flat-rate revision card again.

That said, the previous system with exposed problems cannot be left unchanged. Under the previous commission system, some financially strong restaurant owners registered multiple Ultra Calls near their business locations, monopolizing orders in a so-called 'flag planting' issue. In September last year, a petition was posted on the Blue House petition website requesting improvement of Baemin's Ultra Call fee system. A Baemin official said, "The competition to plant more flags is ongoing, and the problem of the damage falling on small business owners lacking financial power remains a task to be solved."

Furthermore, Woowa Brothers recorded an operating loss last year after introducing the Baemin Open List fee system. Although they maintained a profit trend for three consecutive years since 2016, last year they had to bear increased expenses such as advertising, marketing, and rider promotions. Coincidentally, Baemin abolished the 'Super List' operated since 2016 and introduced the Open List in May last year. The Super List was determined through a bidding competition, where the top three highest bidders were displayed unlimitedly at the top of the app for one month, accounting for a significant portion of Baemin's revenue. This indicates that establishing a new commission system is urgent to improve performance.

Efforts to restore the damaged image must also be expedited. Woowa Brothers has implemented an emergency support plan worth 30 billion KRW for small business owners, including refunding part of the advertising fees for about 140,000 Baemin partner stores during March and April due to the spread of COVID-19. However, this controversy overshadowed the efforts for coexistence and led to criticism that the burden on business owners was increased during the difficult COVID-19 period. An industry insider said, "Since platforms will be ignored if they do not benefit participants, Baemin will focus on presenting a model that benefits all platform participants."

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