Lotte ON makes breakthrough with online luxury shopping, home appliance sale

Lotte On's L.Boutique website / Screen captured from Lotte On

By Kim Jae-heun

For over half a year, Lotte Shopping's most-anticipated online mall Lotte On was not able to prove its competitiveness against major e-commerce firms like Coupang and eBay Korea.

Lotte Shopping started its online business too late in April and it failed to offer any distinguishing services to make it stand out, leaving it outside of the top five in domestic e-commerce firm rankings.

Lotte Shopping President and CEO Kang Hee-tae quickly established a taskforce to concentrate all its effort to find the company's future growth engine.

Kang focused on home appliance and luxury goods, demand for which skyrocketed amid the COVID-19 pandemic that has forced people to stay at home.

Looking at the sales of products in the two sectors, revenue from home appliances increased by 229.1 percent in November compared to May.

Sales of luxury goods on Lotte On also improved by 107.6 percent in the same period, leading to an increase in Lotte Shopping's overall revenue.

The launch of Lotte On's new independent luxury store online L.Boutique contributed significantly.

It offers an overseas direct purchase service for 400 brands from 20 select shops in Europe. Customers don't need to worry about clearing customs and the price includes delivery fees as well as value-added tax.

L.Boutique was introduced to target people in their 20s and 30s, who are considered as the next big spenders in the luxury goods segment. These customers contribute 18.9 percent and 33.2 percent to sales, respectively.

“We have recently seen a rise in the amount of luxury item purchases among people in their 20s and 30s for their own satisfaction. They have certainly become the main target of sellers in the luxury goods market,” a Lotte Shopping official said.

Lotte Group's data analyst unit Lotte Members said 20-something customers purchased about 44,000 luxury items in the second quarter last year, which is seven times more than the 6,000 purchased in the same period of 2017.

Lotte Shopping also adopted an aggressive marketing strategy by offering special prices for specific items every Monday starting September.

Meanwhile, Lotte On successfully registered 68.7 percent more members last month compared to those registered in May. The monthly average purchase amount per customer also increased by 25.6 percent in the same period.

The growing popularity of the shopping platform also attracted more dealers at Lotte On. As of November, the number of dealers on the open market reached almost 20,000 selling 90 million products through the platform.