More Than Half of Online Platform Merchants Pass Costs onto Consumers

[Suwon Ilbo=Reporter Park No-hun] A survey has found that more than half of merchants operating on online platforms such as portal sites and open markets believe that advertising fees and commissions are excessive.

These merchants are reflecting increased advertising fees and commission burdens in consumer prices, ultimately resulting in higher prices for consumers.

Gyeonggi Province announced on the 2nd the results of the 'Gyeonggi Province Online Transaction Survey' conducted through the Korea Distribution Association.

The survey was conducted from September of last year through January of this year as an online questionnaire targeting 500 distance sellers based in the province who operate online shopping malls, inquiring about transaction practices between platforms and merchant operators.

The survey results showed that among 311 online portal merchants, the main platforms were Naver (97.7%), Daum (1.6%), Google (0.6%), and among 189 open market merchants, the main platforms were Naver Smart Store (51.9%), Coupang (36.0%), 11Street (5.8%), and G-Market (3.7%).

Of the 311 merchants using online portals, 37.9% (118 shops) were advertising within the portal, spending an average of 1.873 million won per month on advertising fees.

This represents 10.9% of average monthly sales, with 55.9% (66 shops) of advertising merchants responding that advertising fees were excessive.

Among 189 open market merchants, 43.9% (83 shops) were advertising products within the platform, with 63.8% (53 shops) responding that advertising fees were excessive.

When asked about the causes of increased online platform costs, portal-using merchants cited advertising fees (53.1%), credit card transaction fees (49.9%), and convenient payment service fees (26.7%).

Open market merchants most frequently cited sales commissions (80.5%), and nearly half responded with advertising fees (48.2%).

52% (162 shops) of portal-using merchants and 51.3% (97 shops) of open market merchants responded that they were passing on platform usage cost increases to consumer prices, indicating that increased merchant costs directly translate to increased consumer platform usage costs.

Additionally, merchants reported experiencing unfair trade practices such as 'inducing excessive advertising fees and ancillary service commissions' (48.6%) and 'unclear product exposure standards' (46.3%) within portals, and 'excessive advertising costs and sales commissions' (51.9%), 'unilateral settlement procedures' (38.6%), and 'shifting all return and exchange costs to sellers' (34.4%) in open markets.

To improve unfair trade practices, merchants responded that policies such as 'establishment and mandatory compliance with standard contracts', 'investigation and disclosure of commission rates and advertising standards', and 'strong regulation of sales commission collusion' were needed.

Necessary items for standard contract terms to prevent unfair trade practices included 'product exposure standards' and 'items regarding advertising types and costs'.

Kim Ji-ye, Director of the Fair Trade Bureau of Gyeonggi Province, stated, "Based on the results of this survey, we plan to produce and distribute a Gyeonggi-style fair contract including 'platform intermediary service commission standards' aimed at protecting platform merchants and consumers," and added, "We will do our best at the provincial level to prevent both unfair transactions between businesses and resulting consumer damage."