Home&Shopping, the Secret Behind the Industry's Lowest Sales Commission Rate

Burden of Large-Scale Promotion Costs and Exclusion of Small and Medium Enterprises from Fixed-Rate Broadcasting

[Asia Economy Reporter Kim Cheol-hyun] Home&Shopping has drawn attention by recording the lowest sales commission rate for small and medium-sized enterprise (SME) products among TV home shopping channels last year, according to the Ministry of Science and ICT. Home&Shopping's sales commission rate for SME products was 20%, which is 17.9 percentage points lower than the highest rate among competitors.

Home&Shopping announced on the 29th that it recorded the lowest sales commission rate for SME products in the home shopping industry according to the home shopping sales commission rate statistics released that day. The Ministry of Science and ICT disclosed the 2019 home shopping sales commission rate statistics to promote fair trade and a cooperative environment in the home shopping industry.

According to the results of this TV home shopping sales commission rate survey, Home&Shopping's sales commission rate for SME products was 20%. This is the lowest rate among the seven companies surveyed, nearly half of the highest home shopping channel's commission rate. Compared to the overall average of 30.2% for the seven home shopping companies, it is 10.2 percentage points cheaper. The sales commission rate for all products was also 21.9%, which is 7.2 percentage points lower than the overall average of 29.1%.

The reason Home&Shopping's sales commission rate is lower than the industry average is that Home&Shopping bears the majority of the large-scale promotional costs. Under the Large-scale Distribution Business Act, suppliers can be required to bear up to 50% of promotional costs, but Home&Shopping covers more than 98% of the total promotional expenses. In particular, it fully bears the promotional costs for representative discount and point accumulation promotions such as the 'TenTen Promotion' and 'Relay PangPang,' which are implemented to expand customer benefits.

It is also noteworthy that Home&Shopping does not conduct fixed-rate broadcasting for SMEs. Fixed-rate broadcasting is a sales method where a fixed amount is charged per broadcast time unit regardless of sales performance. For SME partners who do not want fixed-rate broadcasting, which requires payment regardless of sales volume, this can be a burden. Home&Shopping explained that by excluding fixed-rate broadcasting for SMEs, it reduces both the burden on partners and the sales commission rate.

Additionally, Home&Shopping's SME market support program, 'Ilsacheonri,' plays a role in lowering the sales commission rate. Launched in 2012 alongside the channel's opening, Ilsacheonri discovers excellent local SME products and supports their broadcast launch with a low sales commission rate of 8%. Starting with 31 products in its first year, the program has expanded annually and aired 130 products last year alone.

A Home&Shopping official stated, "Based on the founding purpose of coexistence with SMEs, Home&Shopping has maintained the lowest commission rate in the industry and continuously worked to reduce the burden on SME partners. We will continue to do our best to establish practical support policies and expand sales channels through TV, mobile, and overseas markets."

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