[Exclusive] Complaints continue to emerge regarding ‘Avely’, which pours out discount coupons and “passes the burden on to the seller”

Raising the issue of “some major discount events, coupons being issued without seller consent”… Avery refutes “sufficient guidance”

Sellers on ‘Avely’, a women’s fashion platform operated by Able Corporation, are expressing various complaints about the platform’s operation of the ‘discount coupon’ system. They are raising their voices calling for an investigation into whether there are any problems with regulations or procedures, saying that the ratio of the seller's burden to the discount amount is too high and that discount coupons are often issued without accurate prior knowledge of the sellers.

Summarizing the contents of multiple posts posted by Avery sellers on social media such as Naver Cafe and Instagram, they are raising issues, saying that the percentage of the seller's burden of the product discount amount (5% of the selling price) resulting from the issuance of discount coupons by the platform is too high. For example, if a consumer purchases a product priced at 30,000 won using a discount coupon, the seller is responsible for 1,500 won, which is 5% of the price. If the coupon's discount rate is 10% and the consumer receives a total discount of 3,000 won, the seller is complaining that the amount is too large because he or she is paying half (50%). In the same industry, ‘Musinsa’, when applying a discount coupon, the seller is responsible for 2% of the ‘discount amount’ rather than the sales price, so the actual burden ratio is known to be quite low.

Sellers claim that there are basic costs such as various commissions and shipping costs every time they sell a product, so when the burden of discount coupons is added, situations often arise where ‘margins (final profits)’ disappear. Currently, Avery collects 3% of the selling price as a platform commission and 3.96% of the selling price as a payment commission every time a seller sells one product. Free shipping (approximately 3,000 won), which is currently applied to all Able products, is also borne by the seller. In addition, the seller also bears a portion of the additional discount amount or accumulated savings amount applied when the consumer uses the simple payment service.

Avery usually holds promotions at least once a month and provides discount coupons to consumers. Whether or not to use a coupon is ultimately the consumer's choice, but the general trend seems to be that consumers generally try to use discount coupons issued by the platform as much as possible. One consumer said, “I like Abley because they usually give out a lot of discount coupons,” and added, “After checking out the products at Abley’s store’s own mall, I use the discount coupons to buy products again at Abley.”

Mr. A, a seller currently in Abley, pointed out, “When looking at each order, the seller’s burden is only a few thousand won, but if these orders accumulate, it can amount to a considerable amount of money.” He added, “There is a need to lower the seller’s burden ratio for discount coupons.”

Some sellers claim that there are many cases where Abley carries out some discount promotions without seeking the consent of the sellers. In general, Avery informs sellers that they can participate in the promotion through a notice on the seller-only website, and sellers who wish to participate submit an application to participate in the promotion to obtain consent. According to seller A, this method is limited to ‘seller participation-based promotions’, and most major promotions on the platform, such as ‘mega sale’ and ‘seasonal sale’, are only announced and do not accept applications for seller participation.

In the industry, there is generally a diagnosis that there is a need to consider whether there is a possibility of violating the Fair Trade Act when a commerce platform excessively passes on promotional (sales promotion) costs to merchants or unilaterally carries out promotions without prior agreement and consent procedures. The seller's view is that it is necessary to check whether Avery is a platform (company) subject to these regulations and, if so, whether there are any violations of the regulations.

In 2019, the Fair Trade Commission established review guidelines that prohibit online shopping mall operators from unfairly passing on the costs of sales promotion events, such as issuing discount coupons through promotions, to sellers. Previously, only large-scale distributors were prohibited from doing this in accordance with the Large-Scale Distribution Business Act, but now, online shopping mall operators with sales exceeding 100 billion won are also prohibited from unfairly burdening sellers with sales promotion costs. Avery's sales last year were 334.2 billion won, and it is diagnosed as a company that must comply with the guidelines.

Attorney Kim Nam-joo, chairman of the People's Livelihood and Economic Committee of the Lawyers for a Democratic Society, said, “I fully understand the complaints of sellers,” and added, “Even if Abley has taken steps to prevent legal problems such as contracts, if the situation continues where sellers may suffer losses, we can raise the issue with the Fair Trade Commission.”

Gye-Jun Son, an attorney at Daeryun Law Firm, explained, “Under the Fair Trade Act, this can be seen as ‘an act of unfairly exploiting one’s trading position to conduct a transaction with the other party.’” He added, “The Fair Trade Act prohibits a business operator with a superior position in a business relationship from setting or changing transaction terms that are disadvantageous to a business operator with a inferior position, or giving disadvantages in the process of implementing them.” He added, “‘Trading status’ and ‘unfairness’ will be issues, but it appears to be an issue that will require the Fair Trade Commission’s judgment.”

An Able official said, “Avely has maintained a low sharing ratio within the industry by minimizing the burden on sellers,” and added, “The burden of coupon issuance costs is structured so that the burden on Avely increases as the discount rate increases.” He added, “When sellers enter Avery, we provide information regarding coupons and promotions in advance through terms and conditions and policies. We also provide separate guidance through notices on the seller-only website and individual contact when changes occur.”

Meanwhile, Avery plans to increase the platform fee for sellers from 3% to 4% starting September 1. If a payment fee of 3.96% is added, the seller's total fee burden increases to 7.96%. In a notice to sellers on the 15th, Avery said, “In order to expand infrastructure and secure platform stability due to increased traffic, essential operating costs have increased, so we have inevitably adjusted the minimum increase of 1%,” and added, “We plan to maintain the lowest commission rate in the industry even after reorganization.”

Reporter Park Chan-woong (rooney@ilyo.co.kr)

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[Exclusive] Complaints continue to emerge about ‘Avely’ pouring out discount coupons and “passing the burden on to sellers” (link)