Lotte in Crisis After Missing eBay, Seek 'Masterstroke' to Revamp E-commerce

Vice Chairman Kang Hee-tae Encourages Internal Efforts
Declares Continued Pursuit of New M&A
Revamping Lotte ON... Seeking Independent Survival

[Asia Economy Reporter Jo In-kyung] After failing to acquire eBay Korea, Lotte has declared that it will continue to pursue mergers and acquisitions (M&A) to expand its e-commerce business and enhance competitiveness. While the company intends to strengthen the fundamentals of its online business and seek a path for independent survival rather than making reckless investments without guaranteed synergy, experts point out that it will not be easy to find a new breakthrough immediately, given that it is already falling behind in economies of scale and has yet to present a clear growth strategy.

Internal Encouragement Amid Acquisition Failure Concerns

Kang Hee-tae, Vice Chairman of Lotte Shopping, posted a message titled ‘Sharing Results of e-Commerce M&A Progress’ on the company’s internal network last week, stating, "We will carefully review the synergy and appropriateness of value evaluation in the future and actively participate in mergers and acquisitions (M&A) deemed necessary."

This decision considered not only the immediate acquisition costs but also additional investments for synergy creation and competition costs after acquisition. However, for Lotte, a significant revision of its existing strategy to strengthen the e-commerce business through eBay Korea became inevitable. Lotte On’s position in the e-commerce market is bound to be significantly weakened. While competitor Shinsegae Emart, after acquiring eBay Korea, rose to second place with a combined transaction volume of 24 trillion won, following Naver Shopping’s 28 trillion won, Lotte On’s transaction volume is only 7.6 trillion won, far behind Coupang’s 22 trillion won and 11st’s 10 trillion won.

Although Vice Chairman Kang left the door open for additional M&A possibilities, Lotte Shopping faces a challenge as there are no suitable targets, especially after declaring non-participation in the Yogiyo acquisition battle. Consequently, some predict that small and medium-sized e-commerce companies such as 11st, TMON, and WeMakePrice might form strategic alliances centered around Lotte to compete against Naver, Shinsegae, and Coupang.

Can Independent Survival Be Possible?

Vice Chairman Kang said, "We will build specialized vertical platforms focused on categories where Lotte Shopping has capabilities, such as grocery (fresh food), luxury, fashion & beauty, and home appliances, so that customers can clearly understand why they should come to us."

Lotte Shopping explained, "In the mid to long term, we are considering developing Lotte On into a complex shopping platform by combining several competitive category-specific malls." Internally, efforts are reportedly underway to strengthen Lotte On’s actual authority through integration of online and offline businesses and reorganization of the Lotte On team.

An industry insider said, "Both Shinsegae and Lotte initially aimed to achieve economies of scale through acquiring eBay Korea, and considering the rapidly growing pace of the e-commerce industry, there is no time to delay any longer." He added, "For Lotte, given that the market’s evaluation of Lotte On is still not positive, it will be a considerably burdensome situation to devise and strongly drive the execution of new strategies to enhance competitiveness."

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