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A study found that the more small business owners rely on delivery apps, the worse their profitability gets.

Park Kyung-min, president of the Korea Small and Medium Business Association, made the remarks at the 'Sustainability of the Delivery Platform Ecosystem: Diagnosis and Prescription' debate held at the National Assembly on the 16th.

This forum was a place to present a solution to the problem of deteriorating profitability of small business owners, which has been pointed out as a structural problem on delivery platforms. The government, academia, small business owners, and research institutes gathered to diagnose based on empirical data and seek solutions.

On this day, Chairman Park explained the "paradox of growth" in which small business owners rely on delivery apps, the lower their operating profit margins. According to Chairman Park, as a result of analyzing the actual transaction data of 13,098 restaurants in the Seoul metropolitan area for 49 months (2021-2025), sales increased as dependence on delivery apps increased, but operating profit fell. In addition, depending on the size of sales, the higher the dependence on small and medium-sized restaurants, the worse their profitability, and the asymmetry of large restaurants benefiting from "economy of scale" appeared. In particular, medium-sized ones were found to be closest to the risk of deficit conversion.

Chairman Park said, "The more restaurants whose sales were concentrated on one app, the harder it is to move them to other applications (apps) even if fees rise because 'flat assets' such as stars and reviews are not transferred between platforms." The conference president Park then pointed out, "The dilemma of being eliminated if not subordinated to the platform, and decreasing profits if subordinated is not a strategy failure of individual self-employed people, but a matter of market structure."

As a solution, Chairman Park proposed guaranteeing the right to move so that flat assets such as stars and reviews can be taken to different platforms, and exempting small business owners from applying the Fair Trade Act when negotiating terms of transactions such as fees and settlement conditions with the platform.

Jeon Kyung-min, a professor of business administration at Gachon University, announced the structure of the platform ecosystem from a global perspective. Professor Jeon analyzed the trend of "winner-take-all" and "extractive models" in which the platform grows its ecosystem with initial subsidies and then secures surplus through fee hikes and compensation cuts when its dominance is solidified. It also compared the delivery fee structure and regulatory trends of major overseas countries such as the United States, the EU, and China.

The following comprehensive discussion was conducted on how to implement negotiation governance, transparency in cost structure, and tasks felt by small business owners. Kim Kwang-hyun, a professor at Korea University, led the discussion, and Sun Joong-kyu, director of competition policy at the Fair Trade Commission, Lee Sang-yoon, professor at Sungkonghoe University, Lee Eun-cheong, director of win-win cooperation policy at the Ministry of SMEs and Startups, Lee Hye-won, an assistant researcher at the Small Business Policy Institute of the Small Business Market Promotion Corporation, Cha Nam-soo, head of the Small Business Association, and Choi Soo-jung, a researcher at the Small and Medium Venture Business Institute, participated in the discussion.

The forum was co-hosted by Rep. Kim Won-i and Jung Jin-wook, members of the National Assembly's Trade, Industry and Energy Small and Medium Business Committee, and sponsored by the Ministry of SMEs and Startups, the Korea Federation of Small and Medium Business, the Small Business Market Promotion Corporation, and the Small and Medium Venture Business Research Institute. Officials from the National Assembly, the government, academia, and small business organizations attended the event.

Meanwhile, the Korean Small and Medium Business Association plans to continue discussing follow-up policies for the sustainability of the delivery platform ecosystem with the discussion meeting as a starting point.

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