2023 Online Sales Target of 20 Trillion KRW... Lotte's Ambitious Project ON

Online sales of 11 trillion KRW last year, aiming to double within 4 years

Linked with over 15,000 offline stores

Delivering products to customers at their desired time and place

A win-win model where sellers and the platform grow beyond price competition

[Asia Economy Reporter Lim Hye-seon] "Through Lotte ON, we plan to grow the entire Lotte Group's online sales, currently at 11 trillion KRW, to 20 trillion KRW by 2023."

Jo Young-je, CEO of Lotte Shopping's e-commerce division (photo), attended the online shopping mall 'Lotte ON' strategy presentation held on the morning of the 27th at Lotte World Tower in Songpa-gu, Seoul, and expressed this ambition, saying, "'Lotte ON' will be the core growth engine of Lotte Group's distribution business." Launching on the 28th, 'Lotte ON' is an online shopping platform that integrates the online and offline channels of seven shopping malls affiliated with Lotte's distribution subsidiaries. It is the result of Lotte Shopping establishing the e-commerce division in 2018 to secure competitiveness in the online business.

◆Utilizing 39 million big data and personal styling service= The core competitiveness of Lotte ON lies in hyper-personalized solutions. Lotte Shopping's strategy is to make Lotte ON a shopping platform tailored to each individual customer. 'Lotte ON' segments customer behavior and product attributes into about 400 categories and collaborates with Lotte Members to utilize 39 million big data points, covering 75% of the domestic population. A system has been built to analyze customer big data held by Lotte Shopping's distribution affiliates into data with approximately 400 personal attribute values.

CEO Jo explained, "AI analyzes the purchase big data of Lotte Members to predict the customer's next purchase list," adding, "It refers to the purchase lists of other customers with the most similar buying patterns to that customer." He continued, "Because the focus is on what each individual customer wants, we referenced the Netflix platform rather than distribution sites." For example, if customer A buys a swimsuit at Lotte Department Store and sunscreen at Lotte Mart, Lotte ON recommends water play items or travel suitcases. Furthermore, since it can also know the preferences of other customers B or C with similar buying patterns to A, it can anticipate what products A might like. This means a customized service that timely suggests necessary products to customers has become possible.

◆Seamless and convenient shopping= CEO Jo emphasized, "The ultimate goal of Lotte ON is an online shopping platform without a search bar." Since 2018, Lotte Shopping has steadily pursued the O4O (Online for Offline) strategy. Over 15,000 stores nationwide are closely linked with the online platform, aiming for customers to use services seamlessly across online and offline boundaries. 'Lotte ON' implements a shopping environment without boundaries between online and offline by linking with Lotte's nationwide offline stores. A separate 'Store ON' corner is provided, showing only benefits from favorite stores. Through this, each store manager can conduct customized online marketing on-site. They can offer discount coupons to frequent customers and communicate with customers online via real-time live broadcasts. It has become possible to provide personalized benefits online to individual customers even in offline stores.

◆Managed e-marketplace and On Pick index development= Lotte ON newly introduced an e-marketplace system where multiple sellers can register and sell products. It is a system where anyone can freely register products they want to sell. The difference from existing open markets is that sellers are managed based on the On Pick index developed in-house.

CEO Jo Young-je said, "What customers fear most in open markets is buying wrong products that cannot be exchanged or refunded," adding, "Lotte ON sets standards for sellers and applies them as an index, and exposure rankings will be adjusted according to the reflected index."

Moreover, Lotte ON introduces a win-win model where sellers and the platform can grow together. AI-analyzed online and offline purchase trend data will also be shared with sellers. In the future, Lotte Group plans to actively support startups by collaborating with Lotte Accelerator, its startup-focused investment company.

Payments have also become more convenient. The Lotte ON application (app) is equipped with L.pay, Lotte Group's simple payment service. Therefore, without separately installing the L.pay app or L.Point app, payments with L.pay are possible at up to 500,000 online and offline stores with just the Lotte ON app.

◆Delivery to the desired place at the desired time= Lotte ON applies a 'Quick Delivery' service where products are picked immediately after ordering. In collaboration with Lotte Mart, customers can receive ordered products within 1 to 1.5 hours after ordering. Delivery is carried out from Lotte Mart's fulfillment stores. So far, fulfillment stores have been established at Lotte Mart Junggye and Gwanggyo branches. For department stores, the quick delivery service is expected to gradually expand starting with Lotte Department Store in Seoul and the metropolitan area. Additionally, in collaboration with Lotte Super Fresh Center, 'Dawn Delivery' is also provided.

CEO Jo said, "The biggest cost used by Coupang and other distributors is logistics cost," adding, "By minimizing logistics costs and improving the profit structure, we will surpass the break-even point within 4 years." He also added, "We will avoid price wars with competitors."

This content was produced with the assistance of AI translation services.