The Ministry of SMEs and Startups has begun work to boost public food delivery applications (apps). As commission burdens on small merchants grew under a private delivery platform-centered structure, there is a move to reorganize public delivery apps as an alternative. Going forward, the Ministry of SMEs and Startups (MSS) is expected to take the helm as the control tower for public delivery apps and lead the project overall.
On the 1st, according to a compilation of reporting by ChosunBiz, the Ministry of SMEs and Startups (MSS) has recently been reviewing measures to vitalize public delivery apps. The focus is on checking the current status of public delivery app operations and building an integrated management and support system. For public delivery apps being run by local governments without clear definitions or standards, the government plans to establish standardized concepts and roles.
Public delivery apps emerged around 2020, led by local governments, to protect small merchants burdened by the high commissions of private delivery platforms. They challenged private platforms such as Baemin, Yogiyo, and Coupang Eats by touting low commissions, but were shunned due to low awareness and a lack of consumer benefits. Many apps ended operations, including "Ildan Sikeo," launched by Gangwon Province in 2021, "Dongbaektong," launched by Busan City in 2022, and Daejeon's "Whistle."
In the private sector, Shinhan Bank has nurtured the public delivery app "Ddangyo" for five years, and recently Hana Bank formed a strategic partnership with "Mukkebi," which offers the industry's lowest commission.
This time, the Ministry of SMEs and Startups (MSS) plans to comprehensively review not only the current status of existing public delivery app operations and closures but also the operating entities. It will also analyze key indicators such as monthly active users (MAU), card payment amounts, and the number of onboarded merchants. It was also reported that commission structures of each platform and profitability indicators such as sales and operating profit will be reviewed together.
Delivery platform commissions are a core topic that comes up at every National Assembly audit of the Ministry of SMEs and Startups (MSS). Last year, the ministry also conducted a fact-finding survey to gauge merchant satisfaction and appropriate commission levels for major delivery apps such as Baemin, Coupang Eats, and Yogiyo. The average intermediary commission rate was 8.2%, which was found to exceed the perceived appropriate level of 4.5%.
Given the perception gap between private delivery platforms and small merchants, the Ministry of SMEs and Startups (MSS) is expected to lead policy and put forward public delivery apps as substitutes. In addition to strategies to increase market share, it plans to clarify role-sharing among operators, the central government, and local governments.
An official at the Ministry of SMEs and Startups (MSS) said, "We are currently conducting related research services," and noted, "As the research proceeds, we will flesh out the level of (the ministry's) involvement and consult with local governments."