SEOUL, May 15 (Korea Bizwire) — South Korea’s retail giant Lotte said Tuesday it will inject 3 trillion won (US$2.84 billion) into the conglomerate’s e-commerce business in the next five years to cope with the rapid expansion of the country’s online market.
As part of its plan, Lotte Shopping Co. said eight online malls that have been separately operated by the group’s affiliates will be integrated into one, with an aim to generate 20 trillion won in sales by 2022.
A new e-commerce department, set to launch in August, will be responsible for the new platform, which will encompass the retailer’s department store business, discount store chain and duty-free operations, it said.
“Online business is no doubt a new growth for us,” Lotte Shopping CEO Kang Hee-tae said during a press conference in Seoul. “How to create synergy based on our offline channels is the challenge Lotte is facing at the moment.”
“We believe that if we cannot make accomplishment here, we won’t be able to keep our position as the industry’s leading player.”
Lotte’s online revenue stood at 7 trillion won last year.
Last week, the firm announced its plan to merge with the business group’s e-commerce affiliate, Lotte.com Inc.
Lotte’s move is part of a broader trend in the country’s retail industry to beef up the e-commerce business in line with a steep rise of purchases made over the Internet.
In January, Shinsegae announced that it has signed an initial agreement with a foreign investment firm and a private equity firm to attract over 1 trillion won to strengthen its online business.
The company said it will hive off the online business divisions of its department store and discount store chain units and launch a separate affiliate for the e-commerce business this year.
“As a competitor, we admit that Shinsegae is a step ahead of us (in terms of the online business), but based on various distribution channels, Lotte will be able to achieve superiority once we have our new platform all set up,” Kang claimed.
Purchases made using the Internet and mobile devices reached a record 8.96 trillion won in March, up 20.1 percent from a year earlier, according to data from Statistics Korea.