Lotte On, the online retail division of South Korea’s Lotte conglomerate, has announced a voluntary early retirement program for employees who have been with the company for at least three years. The move comes as Lotte On grapples with substantial operating losses and fierce competition from established e-commerce giants like Coupang and Naver.
Eligible employees can opt for a buyout package that includes six months of salary or paid leave. While the exact number of employees targeted by the program has not been disclosed, applications are open until Friday. Lotte On cited the need to reorganize in response to rapid industry changes as the primary reason for this restructuring effort.
Despite its establishment in 2020 to consolidate Lotte’s fragmented e-commerce operations, Lotte On has struggled to gain a significant foothold in the market. The company reported an 85.6 billion won ($62.3 million) operating loss for 2023, marking its fourth consecutive year in the red. This trend continued with a 22.4 billion won loss last quarter. Investments in logistics have been cited as a factor, but profitability remains elusive.
Lotte On was initially created to streamline Lotte’s e-commerce efforts, integrating sales data from its various retail divisions to enhance customer recommendations. However, it has failed to make a substantial impact in South Korea’s competitive online retail sector. Dominated by Coupang, known for its rapid delivery services, and search giant Naver, the market has grown increasingly competitive, further challenged by the entry of Chinese retailers offering low prices.
As Lotte On strives to become more competitive, this early retirement program reflects its broader strategy to adapt and survive in a challenging e-commerce landscape.
