Lotte, Hyundai require highest commissions Department stores, TV home shopping channels get 30% sales commission

By Yoon Ja-young

Lotte Department Store and Hyundai Home Shopping were found to have demanded the highest commissions from suppliers, the Fair Trade Commission (FTC) said Thursday.

The country’s department stores and TV home shopping channels are collecting high sales commissions from suppliers. When a customer buys a 10,000 won item at a department store, for instance, 2,800 won goes to the department store as commission. This means consumers end up paying a higher price.

The FTC examined sales commission rates at seven major department stores ― Lotte, Shinsegae, Hyundai, AK Plaza, Galleria, NC and Donga ― as well as six TV home shopping channels ― CJ O, GS, Hyundai, Lotte, NS, and Home & Shopping.

It turned out that the department stores got on average 28.3 percent of the sales price as sales commission, compared with 28.5 percent the previous year.

This means that if the department store has paid a supplier 7,170 won for a certain item, the price tag at the department store will be 10,000 won for consumers. Lotte Department Store levied the highest sales commission rate of 29.3 percent, followed by Hyundai at 28.2 percent and Shinsegae, 27.8 percent.

However, they levied less commission on foreign luxury brands. When the supplier is a local conglomerate, the sales commission averaged 29.9 percent. When selling products of small- and medium-sized firms, the department stores levied 27.9 percent.

For foreign luxury brands, however, they requested only 25.2 percent. Shinsegae Department Store levied 21 percent on the luxury brands, while Hyundai and AK Plaza also levied less than 23 percent.

They charged especially high commissions on shirts and ties ― 33.8 percent. Children’s goods, leisure items and jeans were also subject to over 30 percent rates. The rates on books, digital and electric devices, meanwhile, were relatively low at below 20 percent.

TV home shopping channels required an average 34 percent, compared with 33.7 percent a year earlier. Hyundai Home Shopping had the highest rates of 35.4 percent, followed by Lotte.

They levied higher rates for small- and medium-sized firms. While the rate averaged 32.3 percent for conglomerates, it stood at 34.4 percent for SMEs.

The FTC explained that they seem to be favoring conglomerates as their products are less likely to cause consumer complaints and requests for refunds later on.

The rate was especially high with shirts and ties, with the home shopping firms getting 42 percent of the money consumers pay. Jeans and casual garments were also subject to high rates.

The FTC said it will continue disclosing the sales commission rates so that suppliers can determine whether to make a deal with these large sales channels.