Reducing Size Across All Online and Offline Platforms
Few Employees Wish to Retire Due to Economic Downturn
The distribution industry is undergoing a series of workforce restructurings. Not only offline distribution companies experiencing poor performance but also e-commerce companies are reducing jobs as so-called 'Altesh (AliExpress, Taemu, Shein)' C-commerce expands its influence in the domestic market. In particular, attention is focused on whether the 'layoff storm' will spread as the Qoo10-affiliated e-commerce platforms, the parent company of Tmon and Wemakeprice (Timep), simultaneously launched restructuring following the large-scale settlement delay incident last month.
According to the industry on the 9th, Lotte Duty Free has been conducting voluntary retirement since the 5th. Eligible applicants are employees aged 43 or older with more than 10 years of continuous service or those who have stayed in the same position for a long time. Applicants receive 32 months' worth of ordinary wages and 20 million KRW in reemployment support funds. Employees with children attending university receive an additional 10 million KRW per child (up to 3 children) for tuition support.
Lotte Duty Free is conducting a separate honorary retirement program for wage peak targets. For the first year of wage peak (born in 1966), 17 months' worth of base salary is paid; for the second year (born in 1965), 11 months' worth; and for the third year (born in 1964), 3 months' worth of base salary is given.
A duty-free shop in Seoul is showing a quiet scene due to the sparse visits of Chinese tourists. Photo by Jo Yongjun jun21@
This voluntary retirement will continue until the 30th. However, Lotte Duty Free grants 10 days of paid leave to applicants who apply before Liberation Day, but it is known that the number of applicants is not yet high. Inside and outside the company, there are talks that the number of applicants may remain at the level of about 20 people, which was the case during the voluntary retirement conducted in December 2022. An industry insider said, "It seems that people are hesitating to apply for voluntary retirement because household finances are not good."
Emart, which conducted voluntary retirement in March, also reportedly had about 20 applicants, which was not as many as expected. At that time, Emart launched workforce restructuring, including the first voluntary retirement in its 31-year history due to the impact of poor performance the previous year. Emart Everyday, which started workforce restructuring ahead of its merger with Emart, was reportedly the same. Although voluntary retirement was accepted to create synergy upon integration, the number of applicants was minimal.
Workforce reductions are even more active in online platforms. SSG.com, an e-commerce company under the Shinsegae Group, accepted voluntary retirement last month for headquarters employees with more than 2 years of service. This was the first time SSG.com implemented voluntary retirement since it was spun off from Emart and established as a corporation in March 2019. At that time, the company explained, "We implemented voluntary retirement to form an efficient organization and expand individual employees' choices amid fierce e-commerce competition."
At that time, the voluntary retirement attracted more attention as the first move of the new CEO, Choi Hun-hak. It was analyzed that the judgment that cost-cutting was urgent due to continued deficits played a role. In fact, SSG.com recorded a deficit of 103 billion KRW last year and an operating loss of 13.9 billion KRW in the first quarter of this year. Due to this background, there have been ongoing speculations that Gmarket might also conduct voluntary retirement. Since being acquired by Shinsegae Group in 2021, Gmarket has recorded operating losses exceeding 100 billion KRW.
Lotte On, an e-commerce affiliate of Lotte Group, also accepted voluntary retirement in June for employees with more than 3 years of service. Additionally, 11st conducted voluntary retirement at the end of last year and in March this year. The dominant analysis is that these companies' voluntary retirements were driven by the sentiment that it is difficult to expect high growth of domestic native e-commerce as C-commerce companies dominate the Korean market. Currently, C-commerce companies such as Ali and Taemu are targeting the market with low-priced products as their weapon.
In the e-commerce industry, Interpark Commerce, a Qoo10 affiliate hit hard by the Tmon and Wemakeprice (Timep) sales payment settlement incident, began workforce restructuring from the day before yesterday. After the Timep incident, sellers began to leave one after another, and the liquidity crisis became a reality, facing delayed settlements since the end of last month. Interpark Commerce, which was transferred to Qoo10 in March last year, has been operating three e-commerce platforms: Interpark Shopping, Interpark Book, and AK Mall. Recently, the company declared its intention to break away from Qoo10 and pursue independent management, seeking self-help plans such as sales and funding.
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