TV Home Shopping and T-Commerce's Nearly 30% Commission Rates Make Margin Gains Difficult for Small Businesses

Korea Federation of SMEs Announces Results of the "2025 TV Home Shopping & T-Commerce Transaction Difficulties Survey for Small Business Owners"

Despite TV home shopping and T-commerce serving as key sales channels to boost small business sales, a recent survey found that they have not resulted in substantial profit improvement. One of the factors hindering margin gains was the burden of commission rates reaching up to 30%.

On March 17, the Korea Federation of SMEs announced the results of the "2025 TV Home Shopping & T-Commerce Transaction Difficulties Survey for Small and Medium Business Owners," which included these findings. The survey was conducted on 856 small business owners who transacted with TV home shopping and T-commerce channels, from November 10 of last year to January 28 of this year.

The results showed that over 70% of respondents (TV home shopping: 72.5%, T-commerce: 75.9%) were satisfied with the transactions, and more than half (TV home shopping: 57.8%, T-commerce: 60.1%) said their sales had increased in 2024 compared to the previous year. However, a significant number of respondents also reported that transaction costs had risen. Although home shopping remains a critical sales channel for increasing sales, it appears not to have led to meaningful improvements in actual profits.

The most common transaction method was "direct contracts and consignment transactions with TV home shopping and T-commerce." This was followed by "contracts with distribution vendors, consignment/special purchase," "direct contracts with TV home shopping and T-commerce for special purchase," "direct purchase," and "contracts with distribution vendors for direct purchase." Most companies using consignment or special purchase transactions were subject to a fixed-rate system.

The average commission rate per company ranged from 25% to 33%, with the overall average being 29.6% for TV home shopping and 28.2% for T-commerce. The burden of commission rates averaging 30% is interpreted as a factor hindering margin improvement. The lowest average commission rate among TV home shopping channels was found at Gongyoung Home Shopping, while for T-commerce it was KT Shopping, but there were significant variations in commission rates depending on the product category.

The survey also found strong interest in utilizing a "T-commerce channel specialized for small businesses" if introduced. The most anticipated benefit of establishing such a channel was "cost savings, including lower sales commissions compared to existing T-commerce companies" (TV home shopping: 46.8%, T-commerce: 48.9%), reflecting high expectations for reduced cost burdens. Seven out of ten respondent companies (TV home shopping: 71.8%, T-commerce: 70.1%) expressed concerns about increases in TV broadcasting fees, recognizing this as a factor that contributes to rising transaction costs.

Looking ahead, the most desired area for win-win cooperation was "reducing commission rates," followed by "expanding broadcast opportunities" and "strengthening marketing and promotion." As for improvements, the top priority was "preferential sales commission rates based on factors such as number of suppliers and transaction volume" (TV home shopping: 60.5%, T-commerce: 59.9%). This was followed by "guaranteeing adequate margins by setting appropriate supply prices relative to retail prices" (TV home shopping: 17.8%, T-commerce: 18.0%), highlighting the need to address cost burdens.

Kim Kimoon, Chairman of the Korea Federation of SMEs, stated, "TV home shopping and T-commerce have established themselves as essential sales channels for small business owners, but the burden of transaction costs remains due to the recent increase in broadcasting fees. Policy support is needed to induce commission rate reductions, such as the introduction of a T-commerce channel specialized for small businesses."

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