LOTTE Group's logistics corporation LOTTE Global Logistics is pushing for a listing on the securities market, while Lotte Shopping, which represents the group's retail business, is also expecting to enhance its logistics service competitiveness. LOTTE Global Logistics has a high revenue share of about one-third from related businesses (captive), and it plans to strengthen its logistics competitiveness with the funds obtained from the listing. Consequently, there is an outlook that synergy will increase with LOTTE ON, which needs to expand its fast delivery services, and LOTTE Mart, which requires the advancement of its fresh food delivery infrastructure.
According to related industry sources on the 28th, LOTTE Global Logistics submitted a securities report to the Financial Supervisory Service last month and plans to finalize the offering price through demand forecasting for institutional investors from the 24th to the 30th of this month. The estimated corporate value immediately after the listing is around 500 billion won.
LOTTE Global Logistics plans to use a significant portion of the public offering funds for expanding infrastructure such as automated logistics facilities and information technology (IT) system upgrades. It has also announced plans to establish a fresh logistics center in Vietnam.
LOTTE Global Logistics has a close relationship with Lotte Shopping. It accounts for about 20% of the cargo volume of Lotte ON, the e-commerce platform of Lotte Shopping, and will be in charge of the logistics for the online fresh food service 'e-grocery' being promoted by LOTTE Mart. Last year, 34.7% of LOTTE Global Logistics' revenue came from LOTTE Group affiliates.
Lotte Shopping is looking forward to strengthening service competitiveness thanks to the listing of LOTTE Global Logistics. In particular, the e-commerce platform LOTTE ON, which launched in 2020, has faced a cumulative operating loss of 560 billion won over five years due to a low market share of around 5%. LOTTE ON has been making efforts to accelerate delivery speed since last year to improve performance.
LOTTE ON began its next-day delivery service 'Tomorrow ON' in April of last year, targeting 10,000 products. Recently, it has increased the range of products eligible for next-day delivery to 50% of its total offerings and is also considering introducing same-day delivery. LOTTE Global Logistics plans to strengthen its capabilities in the fast delivery sector as well. Kang Byeong-gu, CEO of LOTTE Global Logistics, said at a recent IPO briefing, 'We aim to establish a smart logistics system after the listing to provide differentiated services. We will expand delivery services up to weekends if customers want.'
An industry insider stated, 'Currently, the biggest competitor for domestic e-commerce corporations is Coupang' and noted, 'If LOTTE Global Logistics fully expands its fast delivery services, LOTTE ON will also be able to expand eligible items and time frames for next-day delivery, thereby reducing service gaps with competitors.'
LOTTE Mart, which is focusing on the fresh food business, is also placing its hopes on LOTTE Global Logistics. Lotte Shopping transferred the e-grocery business segment held by LOTTE ON to LOTTE Mart last year, shifting its synergy strategy with LOTTE ON, and launched its own app 'LOTTE Mart Zeta' earlier this month. LOTTE Mart Zeta features 'AI shopping,' which utilizes artificial intelligence to provide personalized shopping experiences as its core function.
LOTTE Global Logistics is in charge of the logistics operations for LOTTE Mart's e-grocery, utilizing advanced logistics technologies such as inventory management and robotic picking. Even after the listing, it plans to invest in cold chain infrastructure to strengthen its fresh food logistics network.
Additionally, LOTTE Global Logistics plans to invest 20 billion won to expand refrigerated and frozen logistics centers in Vietnam after the listing. Lotte Shopping currently operates three department stores and 15 large mart locations in Vietnam, and it is expected that the synergy between the two companies will enhance competitiveness in the local retail business.
Lotte Shopping recorded 13.98 trillion won in revenue and 473.1 billion won in operating profit last year. Compared to the previous year, revenue decreased by 0.85% and operating profit by 6.94%. Shin Dong-bin, chairman of LOTTE Group, is making significant efforts to improve performance, as evidenced by his return to the board of directors of Lotte Shopping after five years just last month. The company has set a target for this year of 14 trillion won in revenue and 600 billion won in operating profit.
A representative from Lotte Shopping stated, 'LOTTE Global Logistics has been striving to create logistics synergies at the group level as a core partner of Lotte Shopping,' and added, 'If the logistics competitiveness of LOTTE Global Logistics rises to a new level after the listing, Lotte Shopping will also be able to look forward to strengthening service quality.'