Korean travel retailer Lotte Duty Free has reported increased online store sales in the first half of the year to KRW1.4tn ($1.2bn). This represents a +49% increase year-on-year.

The retailer, which generated online store sales of KRW2tn in 2018, an increase of 46.3% on the previous year, is targeting sales of KRW2.9tn from the store in the second half of the year. Should Lotte reach its growth objective in 2019, this would equate to a year-on-year surge of around +43.6%.

On average, the online shop is welcoming around 5.4 million monthly active users this year (January to June 2019). It offers around 87,000 products from 1,099 brands, of which 324 are Korean industry exclusive labels. These include Filorga, Eve Lom, Santa Maria Novella, Barbour, Dr. Martens, Crocs, Joseph & Stacey, Primage and Lucky Chouette.

The overall assortment ranges from typical duty free categories, to unconventional merchandise such as pet supplies, kitchen and dining gadgets, home décor and laundry detergents.

STRONG AVERAGE GROWTH

Over the last three years, Lotte’s online sales have grown an average 32%, which strongly outperforms its offline sales growth of 15%. Assuming the upward trajectory continues, the contribution of online sales to total business will exceed 30% in the next five years.

Lotte attributes the success of its online store to the continuous efforts of the company to provide the best services in the industry. Last September, for example, the store started supporting traditional Chinese characters. Customers using these characters from countries such as Taiwan, Singapore and Hong Kong have benefitted from this update, according to Lotte.

The retailer added: “Surprisingly, online sales in the past six months (January to June 2019) from these countries surged by 291% from the previous year. Lotte Duty Free is now the one and only operator in the industry supporting four different languages for its online store — Korean, English, Japanese and Chinese (simplified and traditional characters).”

In addition, Lotte’s mobile store began causing congestion at Seoul Incheon Airport pick-up counters in 2018. The level of congestion has since been split into four categories — very good, good, crowded and very crowded. This has helped customers determine the best times to collect purchases at the airport, thus improving overall customer experience.

This March, Lotte extensively updated its online VIP membership management. Customers’ online membership status used to be based on their purchase history, online and in-store over the past two years. This has now been shortened to one year and the minimum purchase level for each membership level (Diamond, Platinum Plus, Platinum Prime and General) has been halved (see below chart).

STRONG RECOGNITION

In the past year, Lotte’s website and mobile app have been consistently recognised with a slew of awards. Last December, for example, the operator received two prizes at the I-Awards Korea event hosted by the Korea Internet Professional Association. It finished first in the Mobile Web Marketing Division and received the KIPFA Creative Special Award in the Smart App Award Division.

That same month, Lotte triumphed in the duty free division at the App of the Year 2018 event, arranged by the Contents Management Society and this April, it finished first in the duty free division at the Mobile Award Korea event, hosted by Korean newspaper, Chosun Ilbo.

The company said: “Lotte Duty Free’s unconventional partnerships with other industry partners and subsidiaries have been electrifying customers.”

Lotte has adopted a creative strategy by working with various industry partners in order to market its online store to young customers. In January and April 2019, for example, it ran exclusive promotions with Market Kurly, a popular online supermarket among young Korean housewives.

This year, Lotte Duty Free has also partnered with interior design sharing platform Today’s House and online fashion retailer W Concept to offer exclusive coupons and discounts for customers. These companies are especially popular with the younger generation.

Additionally, Lotte has been utilising other subsidiaries. Earlier this year, it partnered with Lotte Members (which runs the L.POINT membership reward service), Lotte.com (the e-commerce retailer), LOHBs (the drugstore) and Lotte Mart (the hypermarket).

In an increasingly competitive online retail environment, Lotte says it has maintained its reputation as a customer-centric retailer, not only through a customer-favoured shopping environment, but a diverse range of products.

Kap Lee, Lotte Duty Free CEO, subject of an extensive interview in our major Asia operators report in the May edition of the magazine said: “The world’s best online duty-free operator, Lotte Duty Free, will continue to carry the management philosophy of prioritising customer satisfaction.”