Lotte On, the e-commerce division of South Korean conglomerate Lotte, has initiated an early retirement programme for employees, Nikkei Asia has reported.  

The move comes as the company struggles to gain a foothold amid competition from rivals including Coupang. 

The scale of the voluntary retirement package has not been revealed.   

The programme offers workers with at least three years of service a buy-out that includes six months of salary or equivalent paid leave. 

Applications for the programme are open until Friday 14 June 2024.

The company is reorganising to remain competitive in response to the rapidly changing industry. 

Inside Retail Asia quoted Lotte On: “By streamlining our workforce, we aim to reduce costs and enhance the competitiveness of our organisation.”  

Lotte On reported an operating loss of Won85.6bn ($62.3m) for 2023, marking its fourth consecutive year in the red since its establishment in 2020.

Lotte On was initially created to integrate Lotte's e-commerce operations, which span seven divisions including department stores, supermarkets and convenience stores.  

The company's strategy of centralising years of sales data to enhance customer recommendations has yet to yield the desired market position.

Lotte On's challenges are compounded by the dominance of Coupang and Naver, which together hold 40% of South Korea's online retail market share.  

The competitive landscape has further intensified with the entry of Chinese retailers offering aggressive pricing strategies. 

Lotte On has also discontinued its "Baro Delivery" service, which provided two-hour delivery for grocery items from Lotte Mart.