Lotte Shopping, which operates Lotte Group’s retail brands such as Lotte Department Store and Lotte Mart, will invest 3 trillion won ($2.8 billion) to fortify its e-commerce business under one channel, based on its expertise of operating offline business. 

“We aim to make online sales of 20 trillion won by 2022 and become the industry’s No.1, through our focus on strategies for O4O (Online-for-Offline) business operation,” Lotte Shopping CEO Kang Hee-Tae said during a press conference held in Seoul on Tuesday. 

Kang said Lotte Shopping’s new e-commerce platform will be unveiled no later than 2020, as the demo operation is currently under way. Its name is yet to be decided, he said. 

On Sunday, Lotte Shopping announced in a disclosure that it will merge with its online shopping mall affiliate Lotte.com. 

Through the merger, Lotte Shopping said it expects to make stable profits and secure powerful assets by making use of Lotte.com’s e-commerce know-how. 

Currently, Lotte Corp., the holding company of Korea’s fifth largest conglomerate Lotte Group, owns the largest stake in the two companies -- 38.5 percent for Lotte Shopping and 77.6 percent for Lotte.com.

Last year, Lotte Shopping made 7 trillion won from online sales. It ranked No.3 following e-commerce goliaths G-Market and 11st. 

As part of its plan, Lotte said it will launch e-commerce business division on Aug. 1 to separately run online business for focused and effective e-commerce operation. 

The new division will be in charge of operating online function of Lotte’s eight affiliated companies such as Lotte Department Store’s online mall El Lotte, Hi Mart, Lotte Home Shopping and Lotte Duty Free under one e-commerce platform.

Over the next five years, the company will inject 1.5 trillion won in customer management and marketing, and put 1 trillion won and 500 billion won in building online-integrated distribution system and developing e-commerce platform system, respectively. 

Half of the investment amount will be sourced from its holding company, while the rest will come from the company itself. 

In January, Lotte’s rival Shinsegae attracted 1 trillion won from a foreign investment firm and a private equity firm, to strengthen its e-commerce business.

“Shinsegae is in the lead now, but with our various distribution channels and twofold increase in the number of registered members, Lotte will be able to achieve superiority once we have our new platform launched,” Kang said. 

According to Kang, there are over 15 million customers registered in the company’s online and offline mall membership data base. 

“When Amazon and Alibaba enter the domestic market, we may be afraid, but we are also confident that traditional Korean e-commerce companies here which have a solid base of loyal customers won’t make it easy for them to dominate the market,” said Kang. 

By Kim Da-sol (ddd@heraldcorp.com)