Lotte Group, a retail giant in Korea, has announced a big push to transition its business from offline to online.
The group has presented a new vision to integrate its eight online shopping malls run by differnt affiliates into an omnichannel to provide customers with a seamless shopping experience whether they are shopping online from a desktop or mobile device, by telephone or in a bricks and mortar store.
The group said it would invest 3 trillion won (US$2.7 billion) for the transition to e-coomerce. If the vision is realized, the group will garner 20 trillion won (US$18 billion) in online sales by 2022.
Lotte disclosed its online business strategyin a press conference at Lotte Hotel in Sogong-dong, Seoul on May 15. The integrated online mall will be run by Lotte Shopping.
In order to beef up its online expertise, Lotte decided to establish an e-commerce business headquarters in August. The e-commerce business headquarters integrates online system personnel and research and development (R&D) organizations of affiliates. Lotte Shopping in charge of Lotte Department Store and Lotte Mart will run the e-commerce business headquarters. To this end, Lotte Shopping absorbed Lotte.com, an online shopping affiliate. Lotte explains that the integrated online mall will also be used as a place for win-win growth with small and medium-sized partners.
Details of the strategy were also disclosed. Based on its ability to operate the largest numbers of members in Korea (38 million members) and offline channels (11,000 channels), Lotte plans to complete the omni-channel through O4O strategy. To this end, Lotte will integrate customer purchase data at affiliates. Based on the purchase data of on-line and off-line members, Lotte plans to provide customers with perfect curation shopping anywhere.
Moreover, Lotte will expand delivery services that customers can use more conveniently such as reservation delivery and real-time delivery by utilizing more than 11,000 offline channels as delivery centers. Omni-channel experience stores and unmanned stores will also be increased. As for future shopping, Lotte will concentrate on artificial intelligence (AI)-based voice commerce. The company already developed related engines and is introducing systems by partneringwith IBM.
Lotte plans to complete the omni-channel (the convergence of on-line, off-line, and mobile distribution channels), which has been pushed forward with by Lotte Group chairman Shin Dong-bin since 2014. Lotte's online sales last year ran to about 7 trillion won, the third highest in the online retail industry after G-market and 11th Street.
The announcement of the online vision will pitthe Lotte Group against the Shinsegae Group. The Shinsegae Group announced a plan to integrate its online division which consists of Shinsegae Department Store and E-Mart, into a new corporation dedicated to the e-commerce business based on 1 trillion won of funds induced from foreign investors.