Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Lotte rushes to combine online shopping sites
Lotte Shopping CEO Kang Hee-tae speaks in a press conference on the company's e-commerce strategy at Lotte Hotel in downtown Seoul, Tuesday. / Courtesy of Lotte Shopping
By Park Jae-hyuk
Shinsegae's blueprint obviously unnerved its rival
By Park Jae-hyuk
Lotte did not seem to be well prepared for enhancing its competitiveness in the e-commerce market.
During a press conference on its online strategy, Tuesday, the nation's fifth-largest conglomerate could not come up with specific measures for its new goal.
The offline retail powerhouse has apparently rushed to launch its online business division, in order to counteract its rival Shinsegae's plan to establish a corporation its integrated e-commerce business this year.
Shinsegae Group plans to list the new corporation on the stock market, after merging Shinsegae Department Store's online business division with E-mart's.
According to the nation's 10th-largest conglomerate, the group attracted 1 trillion won ($929 million) in investments from two foreign asset management companies ― Affinity Equity Partners and BRV Capital Management.
“The integrated e-commerce corporation's public offering will benefit the foreign asset management companies,” Shinsegae Vice Chairman Chung Yong-jin said earlier this year.
Against this backdrop, Lotte Shopping announced last week it would merge with Lotte.com.
The company said it will invest 3 trillion won in the online business over the next five years, so as to post 20 trillion won in its online sales and become No. 1 in the domestic e-commerce market.
Lotte's eight e-commerce channels have yet to have significant influences on the market in terms of their sales.
While consumers have turned away from Lotte.com lacking differentiated features, Shinsegae's SSG.com has gained popularity with the country's online shoppers, posting 2 trillion won in sales last year.
Lotte Shopping CEO Kang Hee-tae admitted his company has lagged behind Shinsegae in the e-commerce market, but he said the larger number of Lotte customers and its offline stores will help his company seize the market supremacy in the future.
The CEO also cast a negative outlook for its rival's plans to build a large logistics center for its online business.
However, Lotte has yet to attract any foreign capital for the company's new initiative, unlike Shinsegae.
“The group will invest 1.5 trillion won in the new business, and Lotte Shopping can raise an additional 1.5 trillion won,” he said. “Many foreign investors we met during our overseas investor relations also said they are considering investing in the integrated e-commerce division.”
Critics say the company's plan is unrealistic, given its liquidity has been worsened over poor performances in both domestic and overseas markets in recent days.
Lotte plans to launch the integrated e-commerce platform after 2020.
Amid the fierce competition in the country's e-commerce market, most players ― except eBay-owned Gmarket and Auction ― have suffered lingering losses.
Some market observers expect the e-commerce giant Amazon will enter the Korean market in the near future.
Kang admitted his company has been concerned about Amazon, but added the U.S. company might not secure a dominant position in the Korean market, citing its failure in the Chinese market.