Although Lotte’s bricks & mortar stores clearly make up the majority of the group’s revenue, the company’s online sales also grew rapidly in 2016 driven by South Korean and Chinese customers.
Perfume and cosmetics account for the largest share of online sales with international and South Korean cosmetics brands accounting for a 50/50 split in revenue.
“Our main online shop is Lotte Duty Free Sogong store,” Kim Te Ho, Managing Director of Lotte Duty Free’s Merchandising Strategy Division, said.
“Online sales have been growing very strongly until the THAAD missile issue. [Lotte Group was targeted by the Chinese government over the US THAAD missile deployment].
“Now Chinese customers buy more than South Koreans online. Our total Lotte online sales total was US$1.25bn in 2016. We expected over 30% online sales growth this year without recent diplomatic problems involving South Korea and China.
NO COMMISSION ONLINE…
“For total duty free sales we expected a 20% increase without political problems this year. The Lotte Sogong shop is strong for FIT traveller sales which are over 40% of the store’s sales.”
Although Lotte offers lower prices online, some customers still prefer to purchase offline, whilst expecting a high standard of customer experience and staff interaction.
“We are researching omni-channel shopping as people who buy online also buy offline as well,” Kim remarked.
“If people purchase offline we may have to pass something on to the travel agent, but for online shopping no commission has to be paid.
“There are no sales people, construction costs or sales commission with online sales, so we pass on a discount to the customer.
“The government limits merchandise that can be sold online – only perfume and cosmetics and some fashion items at the moment. Customers wanting luxury brands come to our offline stores, so we are researching the two sales channels.”