ED Heavy-handed online malls

E-commerce giants should stop squeezing small biz owners

Large e-commerce platforms exert enormous influence on online markets. Vendors, especially small ones, often find it hard to sell their products properly without depending on these giant online malls. These e-commerce giants, which hold sway even over large manufacturers, seem to regard small producers as pawns. Vendors can hardly reject the platforms' transaction terms, including entirely unreasonable ones. There are numerous cases of the online malls' heavy-handed business practices capitalizing on this power gap.

For example, Market Kurly, an online grocery delivery platform, has recently demanded its suppliers pay 1 percent to 3 percent of their total delivery amount as a “marketing incentive” if their quarterly sales next year increase by more than a certain percentage from this year. The company then said it would exempt the incentive payment for suppliers who sell their products only on its online mall. The stores are in a dilemma: The incentives are burdensome. However, suppose they promise to sell their products only on Market Kurly. In that case, they may lose their marketing channel if their contracts with the online mall are cut off later.

Complaints are also pouring out about Coupang's “lowest-price policy.” The e-commerce giant has urged its suppliers to raise sales prices of products traded at rival online malls if one-off sales promotion events drove down such prices. The company also pressed contractors to buy ads, passing on sales promotion costs to the suppliers. In August, the Korea Fair Trade Commission fined Coupang 3.3 billion won ($2.8 million) for violating the antitrust act and ordered it to take corrective measures.

Although the Monopoly Regulation and Fair Trade Act regulates such abuses of superior status, there are few cases of disciplining unfair transactions in online markets. Coupang also has lodged a suit against the antitrust agency's measure. To restore order in the market, legislators should establish a legal basis by hurrying to pass an online platform fairness bill through the National Assembly. They should not delay the bill's passage to next year. Moreover, it is never a task to be passed on to the next government.