"Embrace eBay" Lotte-Shinsegae's Fierce Battle for 'Retail Powerhouse' Title

[Asia Economy Reporter Kim Yuri] The industry interprets Lotte and Shinsegae’s move to participate in the main bidding for eBay Korea as an effort by traditional retail giants to regain the distribution dominance lost to the e-commerce sector. Before established e-commerce market leaders like Naver and Coupang, as well as emerging players targeting dawn delivery and the MZ generation, expand their influence in the growing online market, Lotte and Shinsegae aim to leverage eBay Korea’s biggest strength?a transaction volume worth 20 trillion won?to increase their e-commerce market dominance and keep competitors in check, while also seeking synergy with their existing offline businesses.

◆Shin Dong-bin VS Chung Yong-jin Power Struggle

"A company focused on survival rather than growth has no future. Make bold investments necessary to become number one in your respective industries." (Shin Dong-bin, Chairman of Lotte Group) "Make this a winning year. Strengthen collaboration and communication through ‘One Team, One Company’ to create synergy between online and offline." (Chung Yong-jin, Vice Chairman of Shinsegae Group)

The industry unanimously sees the group heads’ statements at the beginning of the year as a sign of their determination to expand influence in the growing e-commerce market. Traditional offline industries have struggled due to the offensive of online shopping in recent years. According to Statistics Korea, last year’s online shopping transaction volume reached 161.1 trillion won, a 19.1% increase from the previous year?the highest since related statistics began in 2001. Meanwhile, offline sales have been declining annually, dropping from 351.7 trillion won in 2018 to 337.9 trillion won in 2019, and further down to 314.1 trillion won last year, decreasing by 3.9% and 7.0% respectively.

Chairman Shin and Vice Chairman Chung are undertaking major offline structural reforms. Lotte Group has restructured its holding company, considered listing Hotel Lotte, and carried out restructuring of Lotte Shopping and others. Early last year, they announced plans to close 200 unprofitable offline stores out of 700 within five years, shutting down over 110 locations by year-end. Personnel restructuring such as voluntary and honorary retirements also followed. Shinsegae has also pursued efficiency improvements at Emart and other stores. In recent years, Emart’s Hakseong and Jangan stores (2017), Bupyeong, Siji, and Incheon stores (2018), Deokyi, Seobusan, and Sangmu stores (2019), and Donggwangju and Incheon Airport stores (2021) were closed. While slimming down existing stores, they sought to renew key stores and develop new commercial districts.

◆Turning Point with eBay Acquisition

Despite group-level investments over several years, Lotte’s Lotte On (7.6%) and Shinsegae’s SSG.com (3.8%) have not been able to advance their market share based on transaction volume. The current e-commerce market is growing nearly 20% annually, moving past a period of fragmentation to a three-power structure. This situation makes it impossible for both Lotte and Shinsegae to give up on acquiring eBay Korea.

Lotte’s strategy is to shake up the rapidly changing e-commerce market through the acquisition of eBay Korea and seize an opportunity for a turning point. Lotte Group also expects synergy by combining the recently acquired Junggonara platform with eBay Korea’s platform. They can also utilize Lotte Global Logistics (Lotte Delivery) network.

Shinsegae, having completed preparations to strengthen e-commerce by converting its online mall SSG.com into an open market, is expected to pursue a ‘two-track strategy’ that leverages SSG.com’s existing strengths in fresh food while expanding volume through the open market. They are also concretizing plans to collaborate with competitors’ online platforms by exchanging 250 billion won worth of shares with Naver.

An industry insider said, "Both companies see increasing their online market share as an immediate task, so they cannot let go of eBay Korea," adding, "Beyond that, to properly utilize eBay Korea’s strengths?its long-established database and marketing capabilities, loyal customer base, open market sellers, and experienced employees?and to create synergy with existing businesses, serious considerations will begin after the acquisition."

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