Lotte Shopping struggling to find its place online

Local retail giant Lotte Shopping is still lost in its online business sector despite Group Chairman Shin Dong-bin’s strong push to reorganize offline businesses and focus on digitization.

Lotte Shopping launched its online shopping platform Lotte ON last April, combining all seven of the company’s retail brands including Lotte Department Store, Lotte Mart and Lotte Home Shopping.

However, it started off uneasy with the platform’s online traffic overloading and data processing paralyzed. The company took quick action to settle down the problem but the real issue lied with customers not returning to shop with Lotte ON.

Last year, Lotte Shopping’s gross merchandise value (GMV) with Lotte ON stood at 7.6 trillion won, which is only 7 percent up from the previous year when it did not have the combined shopping platform. Considering that the size of the domestic online shopping market grew by 19 percent year-on-year, Lotte ON’s business performance has proven unsuccessful. The GMV of its rival Shinsegae Group’s online shopping platform SSG.com improved by 37 percent in the same period.

“Last year, online shopping exploded thanks to the COVID-19 pandemic. Many e-commerce players reduced their losses and increased their GMVs, which makes Lotte ON’s poor performance look even worse,” an industry source said.

Cho Young-je, head of the e-commerce business unit at Lotte Shopping, resigned to take responsibility on Thursday, following Shin’s order last month to review revisions to the business portfolios of companies not seeking changes.

Cho has been working for Lotte Group for 30 years, starting his career at Lotte Department Store in 1990. He took over Lotte Shopping’s e-commerce sector in January 2020.

“Cho failed to create synergy between retail firms under Lotte Shopping and could not offer the best service to customers. This disappointed Shin and Cho had to quit,” an industry source said.

Lotte Shopping is hiring a CEO from outside the company who has more knowledge in online commerce. Lotte ON has allegedly scouted workers from Coupang and other e-commerce firms that made their presence in the local market. The company believes it needs people from outside to establish a distinguished strategy for online business of Lotte style and strengthen cooperation between its shopping subsidiaries.

Meanwhile, Lotte said Cho resigned due to health problems.

“We will seek experts from outside to head Lotte Shopping’s e-commerce business soon,” Lotte Group said.