Lotte Shopping Co. President Kang Hee-tae unveils a plan to invest 3 trillion won to ramp up the on-line business on May 15. (Photo: Lotte Shopping)

Lotte, the nation’s largest distribution juggernaut, has decided to integrate its online shopping malls in order to take a leadership position in the online shopping market.
“Connectivity and integration” is the catchphrase Lotte Shopping Co. President Kang Hee-tae stressed while unveiling a plan to invest 3 trillion won to ramp up the online business on May 15. President Kang said his company pondered for a long time how to connect off-line outlets and online ones to respond to a streamlined shopping market, which is growing fast. It is the predestined task of Lotte, which launched the distribution business with off-line outlets like department stores, he added.
President Kang has come up with a strategy, dubbed “O4O (Online for Offline).”
“A new form of omni-channel that will cover on-line and off-lime outlets will be set up, and on-line malls, being operated by each subsidiary will be merged,” he said.
Lotte’s app platform, to be integrated by 2022, would allow customers to experience new dimensions of shopping like buying subsidiaries’ products simultaneously and at ease and voice commerce in which product recommendations can be made through conversation. Starting with a merger with the online shopping site LOTTE.com, Lotte Shopping will concentrate its capabilities on the online business, the company’s new growth engine. Lotte Shopping aims to raise sales to 20 trillion won by 2022 to become the No. 1 company in Korea.
Lotte Shopping and Lotte Group each plan to pour 1.5 trillion won into the plan, and attract outside money, Kang said. Out of the total investment, 1 trillion won will be invested in the establishment of an integrated online logistics center, 1.5 trillion won will be used for integrating customer integration marketing, and the remaining 500 billion won will be spent on system development, he said.
The reason behind the massive investment plan of the nation’s distribution frontrunner is that the center of gravity in the distribution market is shifting from off-line to online. In January, Shinsaegae Group attracted more than 1 trillion won from abroad and established an online corporation with the goal of raising sales to 10 trillion won by 2023.
Lotte ranked 1st in Korea as the group logged a combined 40 trillion won in sales from the distribution businesses as of the end of 2017. The group’s subsidiaries posted a combined 7 trillion won in online business sales, ranking third following Korea’s No. 1 online company G-Market and 11th Street.
Lotte Shopping will have in mind its own omni-channel based on 38 million members with Lotte Members, 11,000 off-line channel outlets and capabilities of Lotte Logistics and Lotte Home Delivery.
Lotte’s online shopping malls will be integrated by step by step. Some areas, including computing, delivery, marketing and settlement will be combined at the earliest.
Lotte Shopping will launch a process of breaking on-line and off-line barriers. The company will integrate management of memberships each distribution subsidiary owns. Lotte Department VIP member clients will be offered the VIP treatment at Lotte duty-free outlets.
About 11,000 outlets of Lotte subsidiaries across the nation will be used as on-line logistics centers. Lotte Shopping is expanding “smart pick” services in which on-line buyers are allowed to retrieve their products from off-line outlets.