Korea-to-develop-public-delivery-app to-check-Delivery-Hero
Shown above is South Korea’s largest food delivery app of Baedal Minjok. Its recent introduction of a new fee system causes stirs, prompting a provincial government to develop an alternative app with cheaper fees. Photo courtesy of Baedal Minjok

Baedal Minjok apologizes, but will not scrap new fee system

Baedal Minjok’s new fee system for its app-based food delivery services continues to cause stirs. In the wake of strong opposition from restaurants, a provincial government vows to develop an alternative.

Gyeonggi Province Gov. Lee Jae-myung noted Sunday through his Facebook account that the province surrounding Seoul will develop a public delivery service to check Baedal Minjok.

The chief of Gyeonggi, a prosperous province of 13.5 million people, lashed out at the country’s top food delivery app, accusing it of abusing market power.

Delivery apps like Baedal Minjok tries to make an extra margin by cornering the self-employed, which already suffer great pains amid the coronavirus outbreak,” Lee said.

It is the duty of the authorities including the Fair Trade Commission and regional governments to block monopoly, which disrupts fair market orders,” Gov. Lee said.

Baedal Minjok, which was bought by Germany’s Delivery Hero last December, started to charge restaurant owners a fixed-rate commission of their sales’ 5.8 percent beginning in this month.

Previously, most owners opted for a flat-sum system of which monthly cost was as low as $70. But Baedal Minjok currently does not display the users of the old system at the top of its search results.

To attract more customers, restaurant owners claim that they have no choice but to transit to the new system, which they say levy a higher financial burden.

In the face of strong criticism, Baedal Minjok made an apology this week. But it plans not to scrap the new fee system.

It has contended that the fresh system will reduce the cost burden for a majority of restaurant owners, but the argument seemingly fails to win supports.

The Korea Federation of Micro Enterprise came up with a statement to criticize Baedal Minjok, saying, “the new scheme will greatly burden small-sized enterprises.”

The controversies are also feared to negatively affect Delivery Hero’s acquisition of Baedal Minjok, which is now under review by the Fair Trade Commission.

Delivery Hero decided to take over 87 percent of Baedal Minjok’s stake at $4 billion.

Of note is that Delivery Hero also runs the country’s No. 2 delivery app, Yogiyo, and snapped up third-largest player Baedaltong in 2015.

As the global giant controls the country’s top three delivery apps, concerns surfaced about its market dominance when it gobbled up Baedal Minjok.

 

This article is provided by UPI News Korea. _ ED.