Lotte ON, 6 Months Since Launch... "Ongoing Efforts to Improve Traffic"

Q3 Conference Call "Continuous Losses Since Opening"
Online Division Transaction Share Still in the 3% Range
Focusing on Securing Young Customers

[Asia Economy Reporter Cha Min-young] Lotte Shopping's integrated online mall 'Lotte ON' has failed to show remarkable results during the six months since its launch at the end of April.

A Lotte Shopping official stated during the Q3 earnings conference call on the 6th, "Lotte ON has been operating at a loss since its opening at the end of April," adding, "As it is a new business this year, it is difficult to make public announcements externally, but efforts to improve traffic (number of visitors) are ongoing."

The proportion of Lotte Shopping's Q3 online division transaction volume (GMV·Gross Merchandise Volume) was 3.5%, only increasing by 1.4 percentage points from 2.1% in Q2. During the same period, domestic online shopping transaction volume surged by 12.2% to 42.0411 trillion KRW in Q3, boosted by factors such as COVID-19. This suggests that while the overall market size expanded rapidly, Lotte ON was unable to aggressively capture market share.

However, in October, GMV increased by 13% compared to the previous month, thanks to large-scale discount events such as 'Lotte ON Sesang.' Sales of food, daily necessities, and home appliances performed well, and traffic also rose by 15.6%. Lotte ON Sesang, which involved all Lotte affiliates, was held for ten days starting from the 23rd of last month.

Some have expressed doubts about Lotte ON's failure to disclose meaningful online sales indicators. A securities industry insider commented, "The fact that they still cannot clearly disclose the scale of losses suggests a lack of confidence," adding, "Attention is focused on when Lotte ON will be able to produce visible results."

At its launch, Lotte ON set a goal of achieving 20 trillion KRW in online sales and reaching the break-even point by 2023. Even before its launch, it was highlighted as a key project by Lotte Group Chairman Shin Dong-bin, with more than 3 trillion KRW invested in infrastructure development. Recently, two executive-level talents, Kim Hyun-jin, head of the platform center, and Lim Hyun-dong, head of the product division, both formerly of competitor 11st, were recruited externally.

Meanwhile, Lotte ON explained that it continues efforts to secure a younger customer base through digital marketing such as live commerce. The number of sellers on Lotte ON is also steadily increasing. Currently, the number of sellers on Lotte ON has tripled, and the number of products has increased fivefold compared to before Lotte ON's opening.