Lotte ecommerce head steps down

Date : 04 March 2021

Jiong-Jiong Yu

Senior Retail Analyst

Cho Young-je, head of the ecommerce unit at Lotte Shopping, resigned in February as the company’s online business fails to take off.

Failed to create a synergy

Lotte Shopping's gross merchandise value (GMV) stood at KRW7.6 tn in 2020, which is only 7% up from the previous year. It is below the market average of 19% year-on-year (YoY) increase. The GMV of its rival, Shinsegae, improved by 37% YoY during the same period by comparison.

Cho started his career at Lotte Department Store in 1990. He took over Lotte Shopping's ecommerce sector in January 2020.

"Cho failed to create a synergy between retail firms under Lotte Shopping and could not offer the best service to customers." an analyst said.

Online is Lotte's big bet, but showing little signs of improvement

Lotte announced its plan to close 200 stores to concentrate on ecommerce in 2020. It launched Lotte ON, a platform that integrates all Lotte’s retail services, including supermarkets, department stores, home appliance and drugstores. Lotte ON is designed to deal with sales data of more than 70 million items and is capable of providing recommendations based on customer's personal preference.

However, the platform has had many issues dealing with big data. It crashes often, which has alienated many customers. Winning repeat shoppers has become a major problem for the retailer.

Lotte is also short on delivery capacity in comparison to its competitors. It offers a two-hour deliver service across the country. To make it work well, the company will need to increase the number of distribution centres designed for this service.

"Last year, online shopping exploded because of the pandemic. Many ecommerce players reduced their losses and increased their GMVs, which makes Lotte ON's poor performance look even worse." an industry source said.

Lotte is currently looking for Cho’s replacement who has more knowledge in online commerce. The company is determined to turnaround the struggling business. "Change everything from Lotte's past," Shin Dong-bin, chairman of Lotte Group, stressed in a speech recently.