SOUTH KOREA. Leading Korean travel retailer Lotte Duty Free announced today that its online store sales surged by 49% year-on-year to KRW1.4 trillion (US$1.18 billion) in the first half of 2019.
Lotte Duty Free, the world’s number two travel retailer overall by turnover (behind Dufry), said it aimed to achieve sales of KRW2.9 trillion (US$2.45 billion) for its online store in 2019 and to cement its position as the leading global industry player measured by sales through its digital channels.
Lotte Duty Free’s online store posted around KRW2.0 trillion (US$1.69 billion) in 2018 sales, up 46.3% over the previous year. If it reaches its goal KRW2.9 trillion in 2019, this will represent a year-on-year surge of about 43.6%. The online shop is estimated to have welcomed 5.4 million Monthly Active Users (MAU) on average this year (January to June).
Lotte Duty Free’s online sales growth for the last three years was 32% on average, far higher than its offline sales growth of 15%. If the sales pattern continues, the channel will exceed 30% of total sales within five years.
The retailer said that its online store’s success is related to its “continuous effort to provide industry-best services”. Since September 2018, the online store has supported the use of traditional Chinese characters. Customers using these characters, including those from Taiwan, Singapore and Hong Kong, has benefited from this update, noted Lotte Duty Free. Online sales in the past six months (to June 2019) from those countries’ customers surged by 291% compared to the previous year. Lotte Duty Free said it is now the only retailer in the industry that supports four different languages for its online store – Korean, English, Japanese, Chinese (both simplified and traditional characters).
Additionally, the company’s mobile store last year began to provide real-time information on the degree of congestion at Incheon International Airport’s pick-up counters. There are four grades – very good, good, crowded and very crowded. This, said Lotte Duty Free, has helped customers decide when is the best time to pick up their purchases at the airport, with the aim of improving overall customer experience.
This March, Lotte Duty Free updated its online VIP membership management. Customers’ online membership status was previously based on their purchasing history online and in-store over the past 24 months. Now this has been shortened to 12 months. The minimum purchase levels for each grade have also been cut by half (see table below; click to enlarge).
Lotte Duty Free said that its “unconventional partnerships” with other industry partners and Lotte’s other subsidiaries have been “electrifying” customers.
To market its online store to younger consumers, Lotte Duty Free has adopted a new creative strategy to work with various industry partners. For instance, in January and April 2019, it ran exclusive promotions with Market Kurly, one of the most popular online supermarkets in Korea.
This year, it also partnered with the interior design sharing platform Today’s House and the online fashion retailer W Concept to offer exclusive coupons and discounts for their customers. These companies are especially popular with the younger generation, noted Lotte Duty Free.
Lotte’s other subsidiaries have also played their part in boosting sales and awareness. Earlier this year Lotte Duty Free partnered with Lotte Members (which runs membership reward service L.POINT), Lotte.com (the ecommerce retailer), LOHBs (the drugstore), and Lotte Mart (the hypermarket).
Lotte Duty Free also cited the diverse range of products it can offer through its online channels in what it termed the “increasingly competitive online retail environment”.
The online store houses about 87,000 products from 1,099 brands. It ranges from typical duty free categories to unconventional merchandise such as pet supplies, kitchen and dining gadgets, home décor, laundry detergents, and more.
Some 324 brands are Korean industry exclusive brands including Filorga, Eve Lom, S. maria Novella, Barbour, Dr. Martens, Crocs, Joseph & Stacey, Primage and Lucky Chouette.
Lotte Duty Free CEO Kap Lee said: “The world’s best online duty free operator Lotte Duty Free will continue to carry the management philosophy of prioritising customer satisfaction.”
Speaking to The Moodie Davitt Report recently, Kap Lee said of the online business: “It’s more complex than people think because it has developed so quickly. We have to react with agility to those changes. Since we began our ecommerce business, it has grown really fast and we want to keep that growth on track.”
For the first major interview with Kap Lee, which features his comments on the online business, click on the image below.
*In the past year, the website and mobile app have been recognised with various awards. In December 2018, Lotte Duty Free won two prizes at I-Awards Korea hosted by Korea Internet Professional Association (KIPFA), capturing first place in the Mobile Web Marketing Division and the KIPFA Creative Special Award in the Smart App Award Division.
In the same month, Lotte Duty Free also took first place in the Duty Free Division at the App of the Year 2018 awards organised by the Content Management Society (CMS). In April, Lotte Duty Free won first place in the Duty Free Division at the Mobile Awards Korea hosted by Chosun Ilbo, Korea’s leading newspaper.
