Delivery Fees More Expensive Than Food, Why Do They Keep Rising?

Baemin Riders delivery motorcycles operating in Seoul city
[Photo by Yonhap News]

[Asia Economy Reporter Hwang Sumi] It is expected to take some time for the surge in food delivery demand and the increased delivery fees to stabilize.

Recently, delivery app fees have soared to the point where people are talking about the "10,000 won delivery fee era." The government decided to implement a "delivery fee disclosure system" from last month to stabilize the fees, but debates over its effectiveness continue.

The delivery fee disclosure system is a policy that compares the delivery fees of the three major domestic delivery apps (Baedal Minjok, Yogiyo, Coupang Eats) and publishes them once a month on the Consumer Price Information Service website. The purpose is to fulfill consumers' right to know by investigating and disclosing different delivery fees by platform and to encourage competition among platforms to lower delivery fees.

In fact, the Korea Consumer Organization Council (Sodaphyup) announced the results of a "February delivery fee pilot survey" on the 13th of last month. The survey compared delivery fees by distance when ordering chicken and snack foods from franchise stores at a specific address in the most populous neighborhood of each Seoul district during lunchtime on February 12-13.

However, consumers are not feeling the effects. Although the delivery fee disclosure system has been in place for a month, many consumers are unaware of it, and the information provided is criticized as insufficient. The industry points out that simply gathering and showing prices already disclosed on delivery apps is meaningless and questions the system's effectiveness.

The main reasons for the increase in delivery fees are the shortage of delivery riders and the imbalance in market growth. According to the Fair Trade Commission on the 20th, the domestic delivery market has grown noticeably since the COVID-19 pandemic began. It grew more than twice from 9 trillion won in 2019 to 20 trillion won in 2020, and exceeded 40 trillion won last year.

On the other hand, the number of riders only slightly increased. According to Statistics Korea's "2021 First Half Regional Employment Survey," the number of delivery workers in the first half of last year was 423,000, a 14.2% increase from 371,000 in the same period the previous year.

Moreover, the introduction of single-order delivery, where one rider handles one order at a time, has worsened the rider shortage. Previously, riders bundled about four deliveries at once, but with more single-order deliveries, the number of orders that can be delivered in the same time decreases. As a result, income decreases while labor costs from single-order deliveries continue, leading to higher delivery fees.

The delivery industry expects the rider shortage to worsen further due to various regulations.

Since January, the government has mandated employment insurance for platform workers such as quick service couriers and designated drivers. Accordingly, platform workers who sign contracts to provide labor for more than one month and earn over 800,000 won per month must have employment insurance premiums withheld and paid. Those working as riders part-time or holding two jobs tend to view employment insurance enrollment more as a regulation than welfare.

Some argue that regulatory relief to lower the entry barriers for riders is necessary.

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