South Korea’s Woowa Brothers and vendor associations have reached an agreement to waive all commissions for orders under Won10,000 (around $7.27) and to provide tiered support for delivery fees.
The move is part of a broader plan to offer up to Won300bn in backing to vendors up to 2028.
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Woowa Brothers announced the agreement, mediated by the Democratic Party’s Euljiro Committee, with the Korea Franchisee Union and the Association of Fair Platform Business Owners.
It is in response to concerns that vendors have been disproportionately affected by high costs for smaller orders, which could result in them bearing more than 40% of the order amount in delivery fees and commissions.
It also includes a waiver of commission for the vendor-funded part of the discount coupons issued by franchise HQ.
Online delivery platform Baedal Minjok (Baemin) is operated by Woowa Brothers.
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By GlobalDataThe delivery platform had excluded discounts funded by restaurants or franchisees from commission calculations, and this new agreement expands these exemptions.
The support will extend to orders between Won10,000 and Won15,000, with certain methods of support to be determined later.
According to Woowa Brothers, the agreement incorporates further measures including creating a specialised centre to handle vendor inquiries, refining the compensation claim system, reducing the complexity of vendor-related administrative tasks, and introducing a direct communication between vendors and delivery personnel to improve vendor convenience.
These initiatives were conceived following dialogues with vendor associations that commenced in late March.
Woowa Brothers’ annual support could reach up to Won100bn, totalling up to Won300bn over three years, if these were implemented.
In spite of the additional support, Baemin will uphold its present commission rate structure, which ranges from 2% to 7.8% under the current tiered rate plan based on vendors’ Baemin1 Plus revenue.
Woowa Brothers CEO Bum Seok Austin Kim said: “By supporting small orders amid the rise in single-person households, we hope to provide convenience and benefits to consumers, while helping vendors grow the number of orders and reduce cost burdens.”
In 2023, Baemin decided to cease its operations in Vietnam due to intense competition and economic headwinds.
