It was revealed that "heavy hand" layoffs! What happened to ET Mall? The three major battlefields are all in "difficult fighting" and costs are rising sharply

The e-commerce circle is shocked! "Mirror Media" broke the news in the early morning of the 2nd that ET Mall, a subsidiary of Eastern Group, will make "heavy cuts" in layoffs. The report pointed out that in response to reduced profits and increased operating costs, Eastern Group President Wang Linglin initiated layoffs. ET Mall also urgently issued a statement on the evening of the 2nd, emphasizing that the layoffs were manpower adjustments, mainly due to rising operating costs, and expected to lay off 200 employees by the end of 2024.

Looking at the financial report of Eastern Group, the profit for the first three quarters of 2024 was 800 million yuan, a sharp decline of nearly 40% from NT$ 1.29 billion in the same period of 2021. "Mirror Media" pointed out that one of the reasons is that the e-commerce business has been impacted by Shopee, Taobao, etc., and the group has spent money to invest in the expansion of physical shopping malls without achieving results, which has caused ET Mall to be in trouble. According to a statement from Eastern Group, the e-commerce environment has fallen into the red ocean. ET Mall Network's annual revenue from 2021 was 10.6 billion, which has declined to 4.5 billion in 2024, a decline of 58%.

E-commerce was hit hard by the explosion, and physical shopping malls burned money but failed to achieve results. Eastern Group came forward to explain

Eastern Group has vigorously promoted physical shopping mall business in recent years, including Taipei Veterans General Hospital Food Court, Taipei Station Underground Mall, etc. "Mirror Media" pointed out that insufficient basic management of some shopping malls was the main reason for the failure of Eastern Group's physical shopping malls. For example, cleaning issues had to be handled by employees, which caused internal dissatisfaction; Wang Linglin criticized this in many meetings and ordered the reassignment Trusted senior management supervises the operation of the mall on a daily basis, and at the same time mobilizes its Natural Beauty and DIM SUM 8 brands to come in for support in an attempt to improve the operating status.

In response to the losses of physical shopping malls, Eastern Group stated that ET Mall has shifted to offline development since 2023, including shopping malls, REGAL CLUB & SPA, Eastern Pafu Full Health Center, etc. The initial losses were within the plan, and There are also outstanding performances.

Taking the Taipei Station Underground Mall as an example, the trial operation revenue in October 2024 increased 3.45 times compared with the same period in 2023. In addition to training for the Linkou shopping mall that will debut at the end of 2026, it will also continue to expand the Linkou A9 operation headquarters mall in the future, with the goal of challenging the overall The offline retail target is 10 billion. After the completion of the Linkou headquarters, it is expected that an additional 2,000 employees will be added.

Eastern Group emphasized that it has the courage to face loss-making businesses. For example, Happy Shopping and Eastern Integrated Marketing Company (Ponta Card) also admitted that it lost money to stop losses and was responsible to shareholders. Although other business entities, such as Ocean Hotel, Eastern Pets and Natural Beauty, suffered temporary losses, through efforts such as mergers and organizational restructuring, the losses have gradually converged. All the Group's investments are its own funds, and it has not raised any external funds or shares. Although some businesses suffered losses in the short term, overall, the Group's finances are still stable and continue to make profits.

Confirm the layoffs are true! The three major battlefields of e-commerce, shopping malls and television are still struggling, and rectification is imperative

In response to the "heavy layoffs", ET Mall stated that the move was in response to the continued deterioration of its financial situation. It is expected that the number of employees of ET Mall will decrease from 2,300 to 2,100 in 2024 (including those who leave on their own initiative), and the manpower scale may be further reduced in the future.

The main reason for the need to adjust manpower is the significant increase in operating costs, including an annual increase of NT$ 50 million in electricity bills, an annual increase in basic wages of NT$ 15 million, and interest expenses. The annual cost increase exceeds NT$ 130 million.

From the statement, we can also see another potential crisis for Eastern Group: the number of cable TV users has dropped sharply, falling below the 5 million mark, and is currently less than 4.4 million. Revenue has also increased from NT$ 8 billion in 2021 to 2024. It declined to NT$ 6.5 billion, down about 20%. Coupled with the fierce competition from overseas e-commerce, it is necessary to adjust the organizational structure.

Full text of Eastern Group's statement

In response to recent media reports on issues related to ET Mall's layoffs, the company solemnly states as follows:

1. Manpower streamlining plan

(1) The main reason for manpower adjustment is the significant increase in operating costs, including an annual increase of 50 million yuan in electricity bills, an annual increase of 15 million yuan in basic wages and interest expenses, etc. The annual cost increase is more than 130 million yuan.

(2) Facing competition from overseas e-commerce, the e-commerce environment has fallen into a red ocean. ET Mall Network's revenue will decline from 10.6 billion in 2021 to 4.5 billion in 2024, a decline of 58%. Through adjustments to the organizational structure with strategies to deal with this dilemma.

(3) Cable TV users have dropped significantly, from 5.2 million in the past to less than 4.4 million at present. TV shopping is experiencing existential challenges, with revenue declining from 8 billion in 2021 to 6.5 billion in 2024, a decline of about 20%. Organization Reinvention is necessary.

(4) ET Mall has 2,300 employees at the beginning of 2024, and it is expected to shrink to 2,100 by the end of the year (including those who leave their jobs on their own). In addition to providing counseling for those who are about to leave the company to switch to offline services, all resignation procedures are strictly carried out in accordance with legal regulations.

(5) Many well-known technology companies around the world are also facing the situation of streamlining manpower, which is really the way for enterprises to survive. At the same time, they plan to increase the salary of outstanding employees by 5% after the 2024 Lunar New Year to gather the centripetal force of employees.

2. Offline shopping mall development direction and management replacement

(1) ET Mall has shifted to offline development since 2023, including shopping malls, REGAL CLUB & SPA, Eastern Paifu Full Health Center, etc. The initial loss was within the plan, and it has also performed well in order to Take Taipei Station as an example. It was put into trial operation in October this year compared with October last year, and its revenue increased by 3.45 times. In addition to training for the Linkou mall at the end of 2026, Eastsen will continue to expand the Linkou A9 operating headquarters mall in the future, with the goal of challenging the overall offline retail target of 100 billion, and once the Linkou headquarters is completed, it is expected to add another 2,000 employees.

(2) President Wang deeply affirmed General Manager Peng's outstanding performance during his term of office, including curbing shopping mall losses and achieving TV shopping operational results. General Manager Peng has resigned three times in five years due to personal health factors. Taking into account General Manager Peng's I hope General Manager Peng will put his health first and allow him to resign.

3. Status of Eastern Group's business entities

(1) Eastern Group attaches great importance to corporate governance and has the courage to face loss-making businesses. For example, Happy Shopping and Eastern Integrated Marketing Company (Ponta Card) have also admitted that it lost money to stop losses and are responsible to shareholders.

(2) Although other business entities, such as Ocean Hotel, Eastern Pets and Natural Beauty, suffered temporary losses, through efforts such as mergers and organizational restructuring, the losses have gradually converged, and future operations are promising.

(3) The media environment in Taiwan is difficult. ETToday News Cloud has an annual revenue of 2.2 billion. It still shows stable revenue capabilities despite operating independently. Unlike other media, it can obtain financial assistance such as advertising fees from the government or public departments.

(4) All the Group's investments are its own funds, and it has not raised any external funds or shares. Although some businesses suffered losses in the short term, overall, the Group's finances remain stable and continue to make profits.

4. AI Strategy

(1) The Group actively promotes digital transformation and regards AI technology as one of the Group's key future layout directions. The application of AI aims to improve team efficiency and competitiveness, and is by no means a mere replacement of manpower. While deploying AI, it also actively develops offline businesses, such as shopping malls, beauty and health check-up centers, etc., to ensure the company's diversified development and long-term stable growth. .

(2) The Group's emphasis on AI is also a forward-looking layout in response to global trends. We expect that with the support of AI technology, the group can innovate and make breakthroughs in challenges and bring more value to employees, shareholders and customers.

ET Mall once again thanks everyone for their attention. We will uphold a responsible attitude, continue to optimize our business strategies, and meet future challenges.

Source: Mirror Weekly, Eastern Group