Coupang and 11Street clash over commission fee claims

Ecommerce platform 11Street filed a complaint against Coupang for allegedly distorting commission fees that 11Street collects from its sellers.

Coupang's delivery vehicles [YONHAP]

Ecommerce platform 11Street has filed a complaint against Coupang for allegedly distorting commission fees that 11Street collects from its sellers.

Coupang retorted that it found no issues with its published information as it was based on 11Street’s publicly announced data.

“Coupang released a press release on Jan. 3 through its newsroom refuting a media report published on Jan. 2 titled ‘Small and medium-sized sellers stuck in the Coupang swamp.’ Coupang stated and compared 11Street’s platform fees [to its own] in a way that favors them, potentially misleading customers with their unfairly comparative advertising, in order to refute claims that Coupang takes 45 percent in platform fees and to assert that their platform charges are low,” 11Street said on Tuesday.

Coupang had said through its newsroom that “Coupang’s platform charges are among the lowest in the industry at 10.9 percent,” and compared its maximum sales commission rate with those charged by ecommerce platforms SK’s 11Street, at 20 percent, and Shinsegae’s G Market and Auction, at 15 percent.

11Street says Coupang violated the Act on Fair Labeling and Advertising by comparing the maximum sales commission rate — which is only applied to a small amount of goods sold on the platform — without providing clear criteria or grounds, to unfairly implicate that 11Street’s entire sales commission rate is excessively higher than that of Coupang’s.

The maximum sales commission rate as indicated by Coupang is applied to only three categories — men’s designer brands, women’s clothing and designer accessory brands — among all 185 categories on 11Street’s platform, while 180 categories apply a 7 to 13 percent commission rate on transactions, according to 11Street.

11Street said that Coupang also violated the E-Commerce Consumer Protection Act, which prohibits the use of false or exaggerated information and deceptive methods to entice customers, by publishing potentially misleading information that the platform’s overall sales commission rate is high.

“We decided to file a complaint to the Fair Trade Commission (FTC) as we have judged that this is a serious matter that damages the company’s corporate image and influences our attraction of sellers and customers,” 11Street said. “We hope that a fair market will be created under the FTC’s strict judgment.”

“We do not see an issue with the notice as it was drafted based on each company’s publicly published material and clarified that the [the data referred to] the ‘maximum sales commission rate,’” Coupang responded.

11Street is not the only business Coupang has been in a dispute with. It recently ended its almost five-year conflict with LG Household & Healthcare (LG H&H) on Friday.

Coupang said Friday that the platform will resume selling brands retailed through LG H&H including Elastine, Perioe, Coca-Cola and CNP on Rocket Delivery. LG H&H’s cosmetics brands including O Hui, Su:m37 and The Whoo will also be included in Rocket Luxury, which is a category launched in July last year dedicated to selling domestic and overseas luxury cosmetics brands.

“The company has been in talks with LG H&H to resume business since last year,” said a Coupang insider. “LG H&H products will be included in the Rocket Delivery category starting from mid-January.”

Coupang and LG H&H stopped their business after a dispute over delivery negotiations and LG H&H later filed a complaint to the FTC that Coupang abused its position as a retailer such as demanding returns for household goods and Coca-Cola.

The FTC ruled in 2021 that “Coupang abused 101 suppliers, including LG H&H,” and imposed a 3.29 billion won ($2.46 million) fine and a corrective order on Coupang. In the following year, Coupang filed a lawsuit against the FTC asking the commission to cancel the order, of which the sentence will be announced on Feb. 1.

The two companies reached an agreement before the sentence, but the lawsuit against the FTC has proceeded regardless.

The agreement is analyzed by insiders to have resulted from Coupang’s strategy change in partnerships with local businesses amid increasing competition from Chinese ecommerce platforms, as well as another soured partnership with CJ CheilJedang. After the two companies came at odds over instant rice margin rates in 2022, CJ has stopped supplying its products including Bibigo and instance rice to Coupang.

“Chinese apps for direct sales such as Ali Express are gaining steam as a replacement to Coupang,” a retail industry insider said. “To my understanding, Coupang has actively engaged in negotiations with LG H&H before Chinese commerce’s presence becomes larger.”

BY HONG JOO-HEE, KIM KYUNG-MI, KIM JU-YEON [kim.juyeon2@joongang.co.kr]