Lotte On, the online retail division of South Korea’s Lotte conglomerate, is inviting employees to take early retirement packages due to its struggles against more established competitors like Coupang.
Employees with at least three years of service are eligible for the buyouts, which consist of six months’ salary or paid leave. Applications for the program are open until Friday, but the scale of the program has not been disclosed.
Lotte On stated that it is reorganizing to adapt to rapid industry changes and to enhance its competitiveness. The company reported an operating loss of 85.6 billion won ($62.3 million) for 2023, marking its fourth consecutive year in the red since its inception in 2020.
This was followed by a 22.4 billion won loss last quarter. Although the retailer cited investments in logistics as a contributing factor, it has shown little progress towards achieving profitability.
Lotte On was established to consolidate Lotte’s e-commerce activities, previously spread across seven divisions, including department stores, supermarkets, and convenience stores. The aim was to centralize Lotte’s years of sales data to enhance customer recommendations.
Despite these efforts, Lotte On has remained a minor player in South Korea’s online retail market. The leading companies, Coupang and search giant Naver, hold a combined market share of around 40%. Competition has further intensified with the entry of Chinese retailers, who attract customers with low prices.
