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Lotte On launches early retirement scheme amid stiff competition

Posted on by darion

Lotte Mart in South Korea. Source: Ki Young/Shutterstock.

Lotte On, the e-commerce arm of the South Korean conglomerate Lotte, has initiated an early retirement program for employees, Nikkei Asia reported.

The move comes as the company seeks to gain a foothold in the face of competition from rivals including Coupang.

The scale of the voluntary retirement package was not disclosed.

The program offers employees with at least three years of service a buyout covering six months of salary or equivalent paid leave.

Applications for the program are open until Friday, June 14, 2024.

The company is reorganizing to remain competitive in response to a rapidly changing industry.

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Inside Retail in Asia quoted Lotte On: “By streamlining our workforce, we aim to reduce costs and increase the competitiveness of our organization.”

Lotte On reported an operating loss of 85.6 billion won ($62.3 million) for 2023, marking its fourth straight year in the red since its founding in 2020.

Initially, Lotte On was created to integrate Lotte’s e-commerce operations, which span seven divisions, including department stores, supermarkets and convenience stores.

The company’s strategy of centralizing years of sales data to increase customer recommendations has not yet achieved the desired market position.

The challenges facing Lotte On are compounded by the dominance of Coupang and Naver, which together hold 40% of the online retail market share in South Korea.

The competitive landscape has further intensified with the entry of Chinese retailers offering aggressive pricing strategies.

Lotte On has also discontinued its “Baro Delivery” service, which provided two-hour grocery delivery from Lotte Mart.