Acquisition of exclusive Lotte Used Nara… Aiming to reverse the number 1 in e-commerce

Lotte acquires Korea’s No. 1 online used trading company, Used Nara. It is a paving stone to preoccupy a used trading platform that has grown to a scale of 20 trillion won. Following the entry into the bio industry, it is evaluated that the’attack DNA’ of Chairman Shin Dong-bin is reviving.

According to the investment banking (IB) industry on the 23rd, Lotte Group recently signed a stock trading contract to acquire 95% of Used Nara shares in cooperation with Eugene Asset Management and NH Investment & Securities-Opers PE (Institutional Investment Type Private Equity Fund). The total transaction amount is 115 billion won. The main investment in Lotte is Lotte Shopping, with an investment of 20 billion won. Of the co-investors, only Lotte Shopping is a strategic investor (SI).

It is known that Lotte Shopping has the right (call option) to take over the shares of the remaining financial investors (FIs). According to Lotte Shopping’s strategic choice, it means that it can become the largest shareholder of second-hand country at any time.

Lotte Shopping also recently jumped into the acquisition of eBay Korea. Kang Hee-tae, vice chairman of Lotte Shopping, said at the 51st General Shareholders’ Meeting of Lotte Shopping held at the Lotte Big Market in Seoul on the same day, “We are sufficiently interested in the acquisition of eBay Korea.” An official from the IB industry said, “If Lotte Group misses the opportunity this year, it seems that it is difficult to make up for its inferiority in e-commerce forever.”

If Lotte has eBay Korea (about KRW 20 trillion in transaction amount as of the end of last year), which operates G Market and Auction, Lotte’s e-commerce appearance is Naver (about KRW 27 trillion), including Used Nara and Lotte On (about 7.6 trillion KRW). ) And Coupang (approximately 22 trillion won) to become the first in the industry at once.

Lotte Group’s sales, which was 84 trillion won in 2018, have shrunk to a level that is less than 70 trillion won (estimated) last year. This is due to failure to pioneer new business and diversify business. To make up for this, Lotte Group is making bold investments in new foods under the’special order’ of Chairman Dong-bin Shin.

Chairman Shin Dong-bin writes an anti-war drama for Lotte’No. 1 in e-commerce’

The 18th floor of Lotte World Tower in Jamsil, Seoul is where the office of Chairman Dong-bin Shin is located. Right next to it is the Management Innovation Office. This organization was created in August of last year under the special order of Chairman Shin to “Design the future of Lotte”. On the desk of Lee Hoon-ki, head of the management strategy office, who is known as an expert on M&A strategy within the group, there is a list of new businesses that Lotte is considering. It is known that only carefully selected of these will be carried out immediately after receiving the approval of Chairman Shin. In the distribution industry, Lotte’s entry into the online used trading platform market is somewhat strangely accepted. However, experts are agreeing that it is necessary to pay attention to Lotte’s’Big Picture’.

‘No. 1 in e-commerce’, Lotte aims to reverse

The biggest reason for Lotte’s selection of second-hand countries is the possibility that it will be able to grow into a powerful online platform. Used platforms are growing rapidly with the spread of Corona 19. The size of the domestic market, which was only 4 trillion won in 2008, has grown more than five times to about 20 trillion won last year.
Overseas, it is flying more and more. Nextdoor, a used platform in the U.S. scheduled to be listed this year, is valued at 5 billion dollars (about 5.64 trillion won, as of October last year). The market cap of Merukari, a Japanese used platform, reached 8,852.5 billion won as of the 23rd. The stock price from 1,500 yen per share jumped to 5,420 yen in one year.

The attractive point of the used platform is that it pursues a business model that is different from the success equations of existing platform operators such as Facebook, Amazon, and Coupang. It is not a concept of expanding people-to-people connection and commerce, but a concept of’hyper local’ that expands business through trust and ties based on numerous regional bases. Kim Yong-hyun, co-representative of Carrot Market, a former Naver developer, said, “We plan to expand not only to used transactions, but also to advertising platforms for local stores.”

Lotte’s strategy is to create various synergies through the acquisition of Used Nara. It is calculated that if Lotte Group’s distribution and logistics capabilities are combined, it will be able to increase the value of the second-hand country in no time. For example, Lotte’s various offline stores, such as department stores, marts, convenience stores, movie theaters, and amusement parks, can be used for safe used transactions. An official in the distribution industry said, “If a lot of people gather on the platform, there are endless businesses to put on it.” “You can upload online video services such as Netflix (OTT), and you can change into a distribution channel that sells Lotte-affiliated products at low prices.” Said.

Shin Dong-bin’s attack DNA, the next move

Earlier this year, it was observed that in the distribution industry, Lotte Group will pursue a growth strategy centered on chemicals. The opinion was that Lotte Shopping, which is in charge of the distribution sector, will focus on internal maintenance such as restructuring.
It is known that the air flow has changed to’in front of the attack’ as a result of the presidential meeting presided over by Chairman Shin on January 13th. Chairman Shin pointed out the e-commerce (e-commerce) business as an example of losing No. 1 even though it was the first in the industry. Last month, I hardened the head of the business division Cho Young-je, who was in charge of Lotte On. Lotte entered the online shopping market for the first time in the industry under the name of Lotte Internet Department Store in 1996.
In addition to entering the used platform, Lotte Shopping is showing a strong will to acquire eBay Korea. An official from the investment banking (IB) industry said, “Lotte is also well aware of the situation that Shinsegae has joined hands with Naver, which is no less than an enemy, after Coupang’s advance, and even before taking over eBay Korea.” It is highly likely to go to the original bidding scheduled for the first time,” he predicted.

I am also interested in what other fields Lotte will enter in the future. A business official said, “As the global business environment changes rapidly, top business companies such as Samsung, Hyundai Motor Company, SK, and LG Group are rapidly transforming like startups.” “Lotte has a business portfolio focused on traditional industries such as retail chemicals, food hotels & resorts It seems that it has been in the process of completely revising the system.”

Reporter Kim Chae-yeon/Lee Ji-hoon/Park Dong-hui [email protected]