From March, T-commerce Home Shopping Will Also Refund Advertising Costs to SMEs

Ministry of Science and ICT Prepares 'Fixed Commission Refund System Plan for Home Shopping SME Products'
Expansion from Prime Time to All Time Slots, Unified Refund Criteria
Home Shopping Companies Express Regret over Fairness with Live Commerce Market

(Photo by K Shopping Broadcast Capture)

[Asia Economy Reporter Lim Hye-seon] Starting next month, data (T-commerce) home shopping will implement a fixed commission refund system following TV home shopping. The fixed commission refund is a system where, if home shopping sales are poor and losses are significant, the home shopping company returns part of the fixed commission received at the time of contract to the supplier. The fixed commission is a kind of advertising fee that the supplier pays to the home shopping company a fixed amount before the broadcast as a sales agency fee, regardless of the product sales amount.

The Ministry of Science and ICT (hereinafter referred to as MSIT) announced on the 4th the "Operation Plan for Fixed Commission Refund System for Home Shopping SME Products," which centers on this content. This is a measure to create a reasonable trading environment between home shopping companies and small and medium-sized enterprise (SME) suppliers. MSIT explained, "To improve the fixed commission system, since July last year, we conducted a status survey and collected opinions from home shopping companies, and at the same time, held several meetings with suppliers to listen to on-site difficulties," adding, "Based on the feedback from home shopping companies and suppliers, the refund system, which had been pointed out as problematic in the fixed commission operation process, has been improved to enhance transparency and predictability."

Along with expanding the scope of the refund system, the applicable time slots have also been broadened. The refund criteria, which were applied to prime viewing hours, have been expanded to "all time slots." Prime viewing hours are 6 hours on weekdays (8 AM to 11 AM, 8 PM to 11 PM) and 20 hours on weekends (8 AM to 11 PM).

Additionally, when home shopping companies sign contracts with SME partners supplying SME products, they must provide guidelines on the fixed commission operation policy, including refund criteria and procedures. Contracts proceed after the partner's consent.

To prevent confusion among suppliers, the fixed commission refund criteria, which varied by each home shopping company, have been unified. The standard has been simplified to "If performance is less than x% of the target, y% of the fixed commission is refunded." Specific figures can be autonomously determined by each home shopping company. Partners selling intangible products such as travel rentals and mobile phones, or those who have been allocated four or more fixed broadcasts in the previous year, are excluded from the application.

Oh Yong-su, Director of Broadcasting Promotion Policy at MSIT, said, "This improvement of the fixed commission system can contribute to expanding sales channels for excellent SME products through home shopping by creating a reasonable trading environment between home shopping companies and SME suppliers, and through this, viewers can purchase quality products, thereby contributing to consumer benefits."

Regarding the revision of the fixed commission refund system, home shopping companies expressed regret from the perspective of fairness. A home shopping official said, "While the live commerce market, which has rapidly grown to a scale of 3 trillion won, still lacks legal regulations, only home shopping is held to strict standards," and voiced, "The tilted playing field needs to be corrected." They also expressed concerns that distribution channels for SME products applying new materials unknown to the public might narrow.

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