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E-Land Withdraws from Online Luxury Platform Business After 4 Years

[비즈한국] 'Luxury Gallery,' the luxury platform operated by E-Land Global, will cease operations this month. E-Land explained that the decision to discontinue Luxury Gallery was part of a business reorganization aimed at consolidating its luxury retail channels. Industry observers speculate that E-Land had no choice but to withdraw due to deteriorating profitability, as the online luxury platform sector as a whole is currently struggling with poor performance.

Closing Online Operations and Gradually Phasing Out Offline Stores

The operations of E-Land's luxury platform, Luxury Gallery, will end on December 26. Currently, the online website and app have ceased operations, making it impossible to purchase products. Only a notice stating that the service is ending is visible. Luxury Gallery, which launched in 2020 to great industry interest, has quietly closed its doors after four years.

Luxury Gallery is a luxury platform that has been managed by E-Land Global. E-Land had operated offline "Luxury Gallery" luxury multi-brand shops since 2011, and launched the Luxury Gallery app in 2020 to expand its online sales. Upon launching the app, E-Land Global stated its goal of becoming the No. 1 domestic luxury platform within three years. It also announced plans to achieve 500 billion KRW in sales within three years by creating synergy with its offline Luxury Gallery stores.

During the pandemic, when the luxury platform industry was booming, Luxury Gallery saw consistent growth. In 2021, the sales of E-Land Global's global business division (Luxury Gallery and NC Picks) exceeded 130 billion KRW, marking a 30% increase compared to the previous year. This was the highest figure within the E-Land Group. Operating profit grew 20 times compared to the previous year, and the proportion of online sales expanded to account for about half of total revenue.

Following the news of the shutdown, some have speculated that the profitability of E-Land's luxury business has deteriorated significantly. As consumer sentiment has frozen due to the recent economic downturn, demand for luxury goods has softened, and luxury platforms have been facing poor performance. The three major luxury platforms—MustIt, Trenbe, and Ballant—have also experienced revenue declines, leading them to implement voluntary retirement programs and sell off office buildings to improve profitability. Other platforms like Catch Fashion and Hanstyle have shut down due to worsening profitability. The number of offline Luxury Gallery stores has dropped from 13 in 2020 to 5 today.

Lee Eun-hee, a professor of consumer science at Inha University, pointed out, "Recently, not only has demand for luxury goods decreased, but the preference for purchasing them online has dropped significantly. During the pandemic, people bought luxury goods online because offline activities were restricted, but now, there are many more cases of people purchasing them directly in person, so the online luxury business is bound to struggle."

E-Land explained that it decided to end the online business of Luxury Gallery as part of a process to integrate its luxury business channels. An E-Land Global official stated, "We are currently conducting tests to integrate Luxury Gallery with NC Picks. We are considering consolidating the sales that were previously divided between high-end luxury goods (Luxury Gallery) and mid-to-low-end luxury goods (NC Picks) under the NC Picks brand. We determined that integration could create synergy."

NC Picks is a direct-sourcing multi-brand shop operated by E-Land. By sourcing products through a direct-purchase method that reduces distribution stages, prices are 70–90% lower. Previously, E-Land sold mid-to-low-end luxury and young contemporary goods through NC Picks, while high-end luxury goods were sold through Luxury Gallery. By unifying these separated sales channels, the Luxury Gallery business will be terminated and integrated into NC Picks. Currently, there are two NC Picks stores operated by E-Land Global.

The E-Land Global official said, "We are currently testing the integration at the NC Picks Cheonho branch. We will likely decide on future expansion based on the results," adding, "We also plan to gradually phase out the offline Luxury Gallery stores."

Focusing on Ultra-Low-Price 'Off-Price Stores'

It appears that E-Land has effectively given up on the online luxury business. An E-Land Global official explained, "We are differentiating our brand by emphasizing the concept of 'finding treasures' and getting good deals at our offline stores. Currently, NC Picks does not have an online channel. While this could change in the future, our current direction is to focus on offline testing."

Lee Jong-woo, a professor of business administration at Ajou University, analyzed, "Since E-Land has targeted the mid-to-low-price market, its competitiveness is inevitably weak when it comes to standing out in the luxury market. In particular, as E-Land is relatively weak in the e-commerce sector, it likely fell behind other competitors in the online luxury platform space."

E-Land is revising its business strategy and plans to focus on "off-price" stores in the future. Off-price stores are permanent discount outlets that offer even lower prices than standard outlets. As the economic downturn persists and more customers seek rational consumption, the retail industry is trending toward expanding off-price stores. Shinsegae Department Store operates 'Shinsegae Factory Store,' Hyundai Department Store runs 'OFFWORKS,' and E-Land Retail is also accelerating the opening of 'Factory Outlets.'

Professor Lee Jong-woo analyzed, "The online market has become so fierce that retailers are turning offline. Since E-Land has accumulated know-how by operating mid-to-low-end brands and factory outlets, it would be a better direction to apply an off-price strategy to luxury sales as well," adding, "As there are more consumers who want to purchase luxury goods reasonably, the growth potential for off-price stores targeting them appears high."