Lotte ON to prevent Shin Dong-bin's Hotel Lotte listing here

Lotte ON platform / Courtesy of Lotte Shopping

By Kim Jae-heun

Lotte Group Chairman Shin Dong-bin

Lotte Group Chairman Shin Dong-bin's hope to list Hotel Lotte this year, in an effort to grasp total control of the conglomerate, is fading away owing to various factors including its newly launched online retail business that is at the center of criticism.

Lotte Shopping launched its online platform Lotte ON last Tuesday. Only 10 days after its introduction, customers are already rapping out complaints of what Shin called the future of his retail business.

The biggest complaints are frequent shutdowns for mobile devices of the shopping platform, which combines the company's seven affiliates' online businesses.

Lotte ON aimed to bring together all the items sold at Lotte Shopping's affiliates in one AI-based platform. This will allow customers to see more options when they search for certain products.

However, many customers are complaining that the platform is failing to show the products they search for, let alone a variety of alternatives. In fact, when they searched for the products on the existing separate platforms of Lotte Shopping's affiliates, they were able to make purchases.

“We apologize for all the inconvenience. As we were trying to combine all seven online retailers' data, a number of products have been missing on Lotte ON. We are planning to complete uploading 20 million more items by Sunday,” a Lotte Shopping official said.

Lacking options for payment methods also dissatisfies Lotte ON customers. Unlike its competitors such as SSG.com and Coupang, Lotte On only allows customers to make payments with credit cards, mobile phones and bankbooks. Other e-commerce platforms offer more payment choices such as real-time account transfer and deposit without a bankbook.

They complain the customer service center is poorly managed too. Many customers have called the center to make inquiries about missing items and late deliveries but have only been able to contact a telemarketer. Often, the voice on the phone suggests customers use the online chatbot to solve their problems.

Lotte Shopping said they have noted customers of possible inconveniences due to their limited telemarketing team. Only a day after the launch of Lotte ON, the company gave out e-coupons for free delivery and a 3 percent product discount but they will expire by the end of May. This only gives a month for customers to use the coupons and many voiced dissatisfaction with such poor compensation.

According to Google Play Store's reviews, Thursday, Lotte ON received 1.9 points out of five. Its rivals Coupang and SSG.com received 4.5 points and 3.5 points, respectively.

“It usually takes time for a platform to settle down and offer a decent quality of service. Still, given that Lotte ON is run by the country's top retailer, there are too many defects,” an industry source said. “The e-commerce market is in a fierce competition now. If these flaws continue to irritate customers, Lotte ON will be out in the game in the blink of an eye.”

In an interview with Japanese economic newspaper Nikkei in early March, Shin stressed the importance of his retail business' successful digital transition, which he believes can become a game-changer for the group.

Retail is the backbone of Lotte Group and only its stable management allows other important businesses like hotel and chemical firms to run under control.

Currently, Lotte Group's corporate governance shows that Lotte Hotel is a shareholder of Lotte Holdings, which owns various affiliates underneath.

It has been a long-cherished wish for Shin to merge Hotel Lotte and Lotte Holdings. To do this, listing Hotel Lotte here is the most viable option that reduces Japanese firms' ratio of share in the firm.

Shin has been pushing ahead with this plan since 2015, but he was convicted for intervening in state affairs and business corruption.

The outbreak of COVID-19 has plunged the sales of Lotte Group's lucrative duty free business in the last four months and Shin's plan to list Hotel Lotte is stalled for the time being.