On February 2022, the Korean government launched the ‘delivery fee disclosure system’ to help people catch the soaring delivery fees. The purpose of this system is to induce competition between the three major delivery apps in Korea (Baedal Minjok, Yogiyo, and Coupang Eats) by enabling the comparison of delivery costs at a glance. According to the Korea National Council of Consumer Organization (KNCCO), delivery fee disclosure system compares and announces delivery fee of the three major apps by conducting a complete investigation for restaurants in the metropolitan areas of Seoul and Gyeonggi-do Province. Disclosed items include delivery cost of each delivery platform, surcharges by distance, any fees depending on the delivery methods (either bundle delivery or one-order-per-trip service), and the minimum order amount. Some people rated the delivery fee disclosure system positively, since it helps people compare and analyze delivery charges (of each platform), and would ultimately stabilize the delivery fees and minimize consumer burden. On the other hand, others argue that the delivery fee disclosure system is not efficient in terms of effectiveness and reliability. Amid the heated debate over the delivery fee disclosure system, let’s examine the arguments and main points of both sides.
Delivery fees are skyrocketing as the online food delivery service market flourished during the COVID-19 pandemic. The government came up with the implementation of the delivery fee disclosure system which investigates the delivery fees and discloses them as a countermeasure to control their inflation. Despite the growing controversy of effectiveness surrounding the adaptation, the delivery fee disclosure system that guarantees consumers’ right to know, and urges stabilization of, delivery fees should be maintained for further improvement.
First, the delivery fee disclosure system guarantees consumers’ right to know by providing credible information. In February, the Price Monitoring Center of the KNCCO conducted a survey on the delivery cost of a chicken and tteokbokki franchise that consumers used in each of the 25 districts in Seoul and Gyeonggi-do Province and released the result. As a result, there was a price difference up to 5,500 won by apps. They said that the delivery cost of the three major delivery apps was the same for only 21.9% of the total investigation cases, and the delivery fee of the remaining 78.1% was measured differently even though they ordered from the same store based on the same delivery distance. Officials of the
center also added, “Each app provides guidance that the total delivery cost may vary depending on distance, time, weather, order amount, etc., but did not specify how much will be added for each case.” Thus, if the delivery fee disclosure system is created, consumers can compare and analyze fluctuating delivery fees at a glance, and thereby broaden their options. This helps consumers acquire rational decision-making abilities and sound awareness about their consumption. In addition, this system gives consumers the right to determine market demand, which can promote price stabilization. Therefore, the delivery fee disclosure system should be created and maintained.
Second, the delivery fee disclosure system can reduce the burden on consumers and the restaurant owners (mostly self-employed) by encouraging market competition and easing delivery fees. According to the results of a survey released by the online survey company Opensurvey in March, 76.3% of consumers preferred an option with a lower cost of delivery over fast delivery. This implies that a majority of consumers feel burdened with the current delivery fees. The paid delivery fee of each delivery order consists of a part paid by the self-employed, and the rest paid by the consumer. Not only consumers but also restaurant owners pay a delivery fee, and the restaurant owner also pays a platform brokerage fee. Due to the prolonged COVID-19 outbreak, the number of stores that introduced delivery services increased, resulting in a significant increase in demand for couriers. As the demand for delivery workers is soaring, the delivery cost that has risen in response is a huge burden not only for consumers but also for small business owners. KNCCO is currently surveying the status of delivery fees once a month and discloses it to the KNCCO website. If the delivery fee is disclosed transparently through the delivery fee disclosure system, users will use a platform with a lower delivery fee for rational consumption, which is expected to ultimately reduce the delivery fee by encouraging market competition between platforms. As such, the delivery fee disclosure system, which can take a weight off the shoulders of the consumers and small business owners by reducing the delivery fee should be maintained.
Third, a long-term positive effect can quite be expected through the improvement of the delivery fee disclosure system. An official from the KNCCO said, “In the early stages of the disclosure system, we cannot expect a drop in delivery costs right away […] During the first inspection, we figured out that the delivery information was not being informed properly to the costumers." He added that “We need to inform consumers the clear reason for the varying delivery fees for each platform, and we tried to reflect our system to provide better information.” In response, KNCCO plans to gradually expand the survey sample that was limited only to particular regions. The delivery fee disclosure system is an unprecedented new system, and it is premature to withdraw the system based on the inevitable phase of trial and error. It can provide better information by increasing accessibility and clarifying the method and object of investigation. For example, they can expand the survey area, add visual data, or improve readability to increase user accessibility. In July, the KNCCO announced that they will continue to monitor the delivery platforms and come up with improvement measures to stabilize delivery fees. As such, the delivery fee disclosure system should be maintained as there is plenty of room for improvement.
The delivery fee disclosure system helps compare delivery costs by delivery platform at a glance. As long as the delivery fee disclosure system enables consumers to select a relatively lower-charging company, and encourage consumers to acquire rational decision-making abilities, it should be maintained. Now that the delivery culture has developed due to many people staying at home through the COVID-19 pandemic, there is an urgent need to make efforts to reduce the burden on consumers and the self-employed by encouraging market competition of delivery fees for each delivery app. In addition, it is natural for skeptics to arise about the effectiveness of the delivery fee disclosure system, which has been in effect for only half a year. But to solve this problem, the system can be continuously reviewed, repaired, and developed.