“Let us break sluggish growth by online”…Distribution companies to develop e-commerce
Park Min Yeong | ironlung@ | 2018-01-29 11:16:07
The offline retail industry, which is stagnant, is looking for new growth engines online. Although online distribution is showing steep growth, it is noteworthy that offline distributors can find a breakthrough as many competitors are competing in bleeding.
According to the distribution industry on January 28, Korean offline distributors such as Shinsegae and Lotte are speeding up online business expansion. This is a strategy to respond to the rapidly moving consumption center to online and mobile.
According to the Ministry of Commerce, Industry and Energy, the portion of large-format merchandise sales for the past three years declined from 27.8% in 2014 to 23.8% in 2016, and department stores also dropped from 25.2% in 2014 to 22.9% On the other hand, open markets increased from 18.9% in 2014 to 20.5% in 2016, while social commerce increased from 5.9% to 8.2%.
Shinsegae Group has decided to establish a new corporation dedicated solely to online distribution within the year and to make a full-fledged drive to the online business. Department store ？ It plans to merge the online division of E-Mart after the division of its assets, and to make an integrated investment through 1 trillion won invested by foreign investment management companies. It is a strategy to differentiate E-Mart as an online shopping mall and a department store as a high-end fashion mall.
Shinsegae`s department store & The E-Mart offline business is stalled, but the online business is showing signs of double-digit growth. Last year, department store and E-Mart`s online sales each exceeded 1 trillion won. Shinsegae, together with the restructuring of the business structure, reached the goal of becoming the number one online retailer by achieving sales of KRW 10 trillion by 2023. Jung Yong-jin, a vice chairman of the company, will not stay in the offline retailer any more.
Lotte Group plans to integrate online shopping mall modules (programs) scattered by affiliates such as department stores, marts, home shopping, hi-marts, and lotte.com this year. Last year, Lotte reviewed its plans to merge affiliate online channels, but it failed because synergy could fall. Instead, they decided to merge modules such as order, delivery, and customer management for each affiliate, and the module is currently under development. Lotte is pursuing an omni-channel strategy that links both online and offline, and some affiliates are using online distributors such as Kupang to strengthen their online distribution expertise. Last year, Shinsegae and SK Holdings discussed the possibility of strengthening online business through equity investment in SK Corporation and SK Holdings.
Overseas, the distribution center is already moving from offline to online. Wal-Mart is feeling a sense of crisis in the Amazon, and since 2016, it has been strengthening online DNA by buying online shops such as Jet.com, Shvoir, and Bonobos. Wal-Mart, which has organized 150 stores last year, is expected to open 24 stores this year. Starting next month, he is trying to take off the image of an offline distribution company by subtracting `Store` from his official mission `Wal-Mart Store`. Amazon also took on the offline grocery store `Holl Food` for Wal-Mart`s backdrop and defended it with `Prime Wardrobe`, a fashion O2O (Online To Offline) service.
Some point out those offline retailers can not only look at the rosy outlook for strengthening online business. It is a burden to secure profitability from large-scale investments. While it is not difficult to increase online sales by linking offline distribution channels with online, it is pointed out that it may be difficult to expand the market as much as it thinks without dramatic differentiation as the online market is already saturated.
"It is going to be a burden to ask for investors to earn money in a short period of time," said a retailer. Another source in the distribution industry said, "If offline retailers do not offer innovative online business strategies, they can simply move the market online instead of making a profit."
By Park Min Yeong ironlung@
[ copyright ⓒ The Digitaltimes ]
According to the distribution industry on January 28, Korean offline distributors such as Shinsegae and Lotte are speeding up online business expansion. This is a strategy to respond to the rapidly moving consumption center to online and mobile.
According to the Ministry of Commerce, Industry and Energy, the portion of large-format merchandise sales for the past three years declined from 27.8% in 2014 to 23.8% in 2016, and department stores also dropped from 25.2% in 2014 to 22.9% On the other hand, open markets increased from 18.9% in 2014 to 20.5% in 2016, while social commerce increased from 5.9% to 8.2%.
Shinsegae Group has decided to establish a new corporation dedicated solely to online distribution within the year and to make a full-fledged drive to the online business. Department store ？ It plans to merge the online division of E-Mart after the division of its assets, and to make an integrated investment through 1 trillion won invested by foreign investment management companies. It is a strategy to differentiate E-Mart as an online shopping mall and a department store as a high-end fashion mall.
Shinsegae`s department store & The E-Mart offline business is stalled, but the online business is showing signs of double-digit growth. Last year, department store and E-Mart`s online sales each exceeded 1 trillion won. Shinsegae, together with the restructuring of the business structure, reached the goal of becoming the number one online retailer by achieving sales of KRW 10 trillion by 2023. Jung Yong-jin, a vice chairman of the company, will not stay in the offline retailer any more.
Lotte Group plans to integrate online shopping mall modules (programs) scattered by affiliates such as department stores, marts, home shopping, hi-marts, and lotte.com this year. Last year, Lotte reviewed its plans to merge affiliate online channels, but it failed because synergy could fall. Instead, they decided to merge modules such as order, delivery, and customer management for each affiliate, and the module is currently under development. Lotte is pursuing an omni-channel strategy that links both online and offline, and some affiliates are using online distributors such as Kupang to strengthen their online distribution expertise. Last year, Shinsegae and SK Holdings discussed the possibility of strengthening online business through equity investment in SK Corporation and SK Holdings.
Overseas, the distribution center is already moving from offline to online. Wal-Mart is feeling a sense of crisis in the Amazon, and since 2016, it has been strengthening online DNA by buying online shops such as Jet.com, Shvoir, and Bonobos. Wal-Mart, which has organized 150 stores last year, is expected to open 24 stores this year. Starting next month, he is trying to take off the image of an offline distribution company by subtracting `Store` from his official mission `Wal-Mart Store`. Amazon also took on the offline grocery store `Holl Food` for Wal-Mart`s backdrop and defended it with `Prime Wardrobe`, a fashion O2O (Online To Offline) service.
Some point out those offline retailers can not only look at the rosy outlook for strengthening online business. It is a burden to secure profitability from large-scale investments. While it is not difficult to increase online sales by linking offline distribution channels with online, it is pointed out that it may be difficult to expand the market as much as it thinks without dramatic differentiation as the online market is already saturated.
"It is going to be a burden to ask for investors to earn money in a short period of time," said a retailer. Another source in the distribution industry said, "If offline retailers do not offer innovative online business strategies, they can simply move the market online instead of making a profit."
By Park Min Yeong ironlung@