Operation Plan for Refund System of Fixed Commission Fees on Home Shopping SME Products... Industry Expresses "Concerns Over Side Effects"

[Asia Economy Reporters Lim Chun-han and Jeon Jin-young] The Ministry of Science and ICT (MSIT) has announced guidelines for the 'Home Shopping SME Product Fixed Commission Refund System Operation Plan,' but voices of concern about side effects are emerging within the industry.

A representative from the home shopping industry said in a phone interview with Asia Economy on the 4th, “The intention of the system is good, but side effects are expected once it starts,” and pointed out, “There will be filtering of well-selling companies and those that are not before programming.” Another official also said, “If refunds must be made when sales do not occur, home shopping will have no choice but to focus on profit-generating percentage-based broadcasts rather than fixed-fee broadcasts that absorb losses,” adding, “This will actually reduce the space for SMEs.”

Until now, home shopping companies applied a fixed commission system where small and medium-sized suppliers paid a fixed amount to home shopping as a sales agency fee regardless of product sales when contracting broadcasts. Suppliers could receive partial refunds of the commission if losses were greater than expected. However, problems were raised as the refund system varied by home shopping company and broadcast time slot, making it difficult to predict refund commissions. Accordingly, MSIT explained that the new guidelines unify refund criteria to increase predictability.

The existing refund criteria, which applied only to TV home shopping companies and prime broadcast time slots?weekdays from 8 to 11 a.m., weekdays from 8 to 11 p.m., and weekends from 8 a.m. to 11 p.m.?will be expanded to all companies including TV home shopping and data home shopping, and all time slots. The guidelines also include provisions to incorporate the 'Fixed Commission Operation Guidelines' and 'Detailed Refund Criteria and Procedures' into the home shopping companies’ electronic contract systems. Additionally, when fixed commissions are refunded if sales performance falls below a certain level compared to broadcast sales targets, each home shopping company must set the refund rate in advance and notify suppliers beforehand.

The guidelines are expected to be implemented next month after home shopping companies complete revisions to internal guidelines and updates to electronic contract systems. Oh Yong-su, Director of Broadcasting Promotion Policy at MSIT, stated, “We believe that this improvement in the fixed commission system will create a reasonable trading environment between home shopping companies and small and medium suppliers and contribute to expanding sales channels for excellent SME products through home shopping.”

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