Next Logistic Wave: Shared Logistics Services by Newly Independent Subsidiaries of Manufacturers?

It is said that one of the reasons why 3PL services in Japan have not done as well as expected is because most major manufacturers and retailers have their own logistics companies as subsidiaries. Still, according to ongoing research by an Industry Publication from 2005, 3PL services have been growing at an average rate of 9.45% per annum from the start of the survey.

However, it is now believed that their main source of growth, dedicated distribution centers for large retailers, have now come to hit a ceiling. According to Masahiro Oya, Publisher of Monthly Logitsics Business, there is no decline in the number of orders received, but each project is getting smaller and smaller. He also points out that existing centers are suffering from a fall in volumes.

He analyzes that the 3PL service providers need to go upstream to the manufacturers to continue to grow. But the large manufacturers have their own subsidiaries that specialize in providing logistics services.

The key difference in the way 3PL has been growing in Japan vs. that in Europe is in that while European manufacturing businesses opted to outsource non-core operations in the form of endorsing 3PL, the Japanese market has grown in quite the opposite direction. It was not the manufacturers, but retailers who wanted to take advantage of their purchasing power by collating all their purchases in a warehouse, and then break bulk and ship to their various stores efficiently that embraced 3PL.

But that has all now come to a head, it seems...

So, will manufacturers be able to cut their logistics subsidiaries loose so that they can go ahead and offer their services to competitors as well?

Will such former subsidiaries, once cut loose, become prime acquisition targets for the likes of Sagawa and Yamato? - Maybe not as especially Yamato likes to build everything in-house.

Japan Post tried acquisition and learned the hard way that service disruptions due to tatty integration processes are a much higher price than it wanted to pay.

Either way, a new trend will emerge in the Japanese 3PL market because not having one is not an option if the industry wants to continue to grow.


New Trend? EXTREME Commutes

An Australian friend who works as a mountain climbing guide in Nepal told me once that the extremely hard core climbers are usually Japanese... Doing something in the extreme, in a way, is a Japanese trait.  Why else would we be known as the market with the most demanding consumers in terms of quality, convenience, and hospitality?

EXTREME Commuting is a hash tag on Twitter that is gaining popularity.

The idea is to play first and work later - on week days - and tweet about it.

Let's look at a day in the life of self-proclaimed leaders who spearheaded the hashtag/trend. They are two men, aged 29 and 34.

At 5:20 am, the duo meet up at Kita Kamakura Station, some 50km outside of Tokyo.  Takahiko Shiina, aged 34, has left home at 4 am. His partner, Sota Amatani, aged 29, left Tokyo the night before and spent the night at a manga kissa, or coffee shop that specializes in providing private space and lots of comic books.

They head to an old Zen temple, Enkaku Temple. It is the first time for Amatani.
Their EXTREME Commute on this day started with a one-hour zen meditation.

Then, they moved on to Yuigahama beach just after 7:00am. Shiina rolls up his trouser legs and Amatani strips down to his boxer shorts and the two splashed about for around 5 minutes, though they claim "it felt like half an hour of fun!" They progress to using Shiina's tie as a blind fold to try to break a watermelon with a baseball bat - a traditional summer beach picnic event.

They manage the break the watermelon open on the fifth round of trying and lap up the fruit like a pair of hungry dogs, according to a Nikkei reporter who was with them and who reports on their EXTREME Commute of the day.

"I feel like I am at the extreme opposite position of a white collar worker right now!" proclaims Amatani.

Though the clock is ticking, the pair insist on wrapping up their excursion with a bowl of ramen noodles. They rush into a noodle shop before 8 am and devour their meals in under 5 minutes to catch the 8:12 train to Tokyo.

The rule is to play hard and never be tardy for work, they say.

Their EXTREME Commute started as a fun discussion over drinks. Now, they may have up to 10,000 followers checking their tweets on their latest adventure with other people sharing their EXTREME Commutes.

From 2 through 6 September, the duo called out to their followers to participate in an EXTREME Commute-athon. More than 100 groups have joined so far.

"It is more refreshing than taking a day off" because every minute counts and there is no dilly dallying around, it seems. And another important factor is to "try" and "challenge onself" to do new things.


Cool Geeks Have Deep Pockets: 3-Months Target Achieved in 5 Days - Domino's Pizza x Hatsune Miku

In March 2013, Domino's Pizza launched an app that enables customers to place orders using the vocaloid software Hatsune Miku; take AR (augmented reality) photos with the popular vocaloid character, and have her perform live using the delivered pizza box as a stage: http://youtu.be/gW2D_Votd2Y

They achieved their 3-month target in 5 days.

Until then, Domino's, like many other national brands, focused on securing popular TV animation characters from such mega hits as Pokemon and One Piece.

The collaboration with Hatsune Miku was the first time they went for a niche and a deep dive - which paid off.

They have launched an upgrade and a second campaign since, and continue with their success.

It is Cool to Be a Geek
When Dentsu ran a survey of 10,000 youths aged 15 ~ 39 in 2012, 49.9% of teenagers said they are "Otaku" or a geek.

The survey in dicated that the younger the group, the higher the tendency to be proud to be a geek, which clearly shows that there is no stigma attached to geekhood for teens.

"They obviously see the expression 'Otaku' to mean that 'I am really passionate about something' rather than for it to mean anything negative," says Yuichi Yanagida, Strategic Planner at Dentsu who oversaw the survey.

The "ultimate geek fest," the Comic Market (a.k.a. "Komike") showed that there are less traditional geek types and more "normal" kids who are just passionate about animated films and manga.
Held twice a year, Komike boasted a whopping 590,000 visitors in three days from 10 through 12 August 2013.

This year, it was such a popular event for exhibitors, that it was said that only 60% of applicants actually got to exhibit.

Microsoft, Yukijirushi (Snow Brand), and Suntory were among the national brands that participated this year.

While some die hard Komike fans had a chilly reaction to having such brands and companies come to Komike, many said "it is OK so long as they team up with someone on the inside who is cool (as in the case of Yukijirushi and Suntory, they joined forces with Pixiv and had fans submit drawings of pretty girls for labels. Komike became the place where the winners were announced)."

Convenience Store Chain LAWSON'S has a reputation for being geek friendly with their promotions that attract approximately 30,000 viewers when it comes to time to announce them. They have offered such services as "wake up calls in popular animation character voices," among others.

These promotions are created by an internal committee of geeks who really are in the shoes of the target audience.

There has been a lot of talk of "bid data getting personal," but these are examples of targeting a very obvious niche and diving deep into their pockets.


Mixi's New CEO - Is He Too Late To Bat?

As of 25 June, founder of Mixi, Kenji Kasahara will step aside from the helm and become Chairman, passing the baton to Yusuke Asakura, 30. Once synonymous with social networking, Nomura Research Institute estimates in its report released in November 2011 that approximately 9.7 million consumers have left Mixi, of the 23 million who they believe have used Mixi at least once in their lives.

Last I checked, Mixi was for humans,
but at the moment, their home page is full of pets!

Nomura estimates that there are 21 million FB users (active and non-active combined), while the figure for Twitter is 20.7 million. Compared to these "foreign players," Mixi definitely remains the biggest. Yet, as at end March 2013, Mixi posted a 5% decline in revenue due to stagnant advertising revenue growth.

At the May Strategy presentation, Asakura announced that there will be three strategic pillars for Mixi in the immediate future: (1) Increasing revenue both in and outside of the SNS Mixi; (2) Aggressive investment activities into external business opportunities; and (3) Nurturing entrepreneurs from within.

Currently, 90% of Mixi's revenue comes from the SNS Mixi, and about this, Asakura says, "Mixi has been making money on advertising revenue for mobile phones (pre-smartphones). That market is fast disappearing. It is obvious to everyone that there is a massive shift towards smartphones, but on the one hand, the smartphone advertising market is not as big as we had hoped it would become."

"Instead of waiting for the market to grow, it is imperative that we first build services that users are happy to pay for."

Mixi has announced that it will launch 50 apps by March 2014. At the moment, half of their paid-for apps revenue comes from games.

"There is still much more room for games to grow," says Asakura. But if we look to a slightly longer term future, we can see that as with (recipe site) Cook Pad, consumers will pay if they feel that the service features are of value. Mixi plans to release apps that are relevant to people's every day lives, too."

Asakura also says that Facebook and other SNS are not the only competition. "Be it the weather forecast or apps that help users find trains and make connections - whatever app is on the top screen of a smartphone is competition."

Asakura explains that the founder, Kasahara, is also undertaking a mission to create new businesses within Mixi. "The goal is not for us to increase our revenue from the current 12 billion yen to 15 billion yen. We want to grow exponentially and we hope to be able to create three or four new services that will be bigger than Mixi in the process," he says.

A 29-year old office worker looks back 7 years ago when she had just graduated from university and says, "When I was in college, everyone was using Mixi. But ever since I have begun to work, I continued with my public diary for a couple of years and kept in touch with classmates and friends, but "eventually, I was connected to too many people and that began to restrict what I could write."

Another woman, aged 33 says, "One of the reasons why I stopped using Mixi is because my friends stopped."

A man in his 30s says, "I have begun to use Facebook and could not see why I also need Mixi."

The Nikkei MJ summarizes that people who used Mixi to enhance their real life relationships have moved on to Facebook and LINE.

A marketer with a brand that has a Mixi page says, "At the moment, when we discuss online marketing, we start out by plotting what to do on Twitter and Facebook. We continue to update our Mixi page, but we question whether Mixi is the right platform to establish the kind of sticky relationship we hope to have with our customers on SNS."

Some analysts say that Mixi lost its edge when it failed to launch new services that fueled loyalty among its users. But others point out that the more than 100 million users is still a force to be reckoned with and it is not too late for Mixi to get back on track.

Mixi launched its Innovation Center in August 2012, and such services as the online album creator, Nohana, has come of it. However, there is yet to be a service that could be bigger than Mixi itself, and the market is split on whether Mixi actually has it in them to do it.

As mentioned by Asakura himself, the smartphone market seems to be reaching a plateau at the moment, and certainly, LINE and its wanna-be's have changed the landscape in that smartphones are phones only in name, and that they are more of a connectivity device.

This was taken in the "no mobile phones car"
of a train... Who said only the youths are addicted to
being on their mobiles?
Using Facebook messenger, LINE, Comm, and Viber makes email addresses obsolete. As Japan is not a GSM market where texting is dominant, mobile email was _the_ killer app for mobile phones, in addition to games. But now, all one needs is a phone number or Facebook account to chat and talk to friends.

A survey showed that mobile phone and smartphone users spend 50% of their time using the phones on games and SNS, but the other time is split among shopping, reading the news, listening to music, and watching TV (one seg).

Will Asakura and Mixi be able to come up with something in addition to the above? Or is Mixi already a thing of the past?

Reference: Nikkei MJ 12 June 2013 interview with Yusuke Asakura


100 Billion Yen Market: Japan's Booming Fragrance Market Leaves Perfumes in the Dust

In around the year 2000, the market for perfumes and scented fabric softener was around the same size, but now, the latter is double the size and Kao predicts that the market will hit the 100 billion yen mark in 2013.

I have heard repeatedly from the CEOs and COOs of major European luxury cosmetics brands that unlike the western markets, only around 8% of total revenue comes from perfumes in Japan. Some surveys indicate that Japanese women are very fickle when it comes to perfumes and cologne; that they change their fragrance every season. Others show that Japanese women tend to avoid perfumes from the 1990s, or after the burst of the bubble economy, citing that we have been in a "no fragrance" era.

Sure enough, Kao's chief perfumer, Shigeru Sawamura is quoted in the 3 June 2013 issue of the Nikkei MJ as follows: "There was a long time when adding even the slightest fragrance to products meant across-the-board rejection from consumers," looking back at his 36 years on the job. But he says now, "we can't seem to put enough fragrances into products!"

Supermarket shelves are filled with scented fabric softeners
Kao's research shows that one out of every user of fabric softener has at least two different products on hand at all times, even in single-person households. This is because consumers are changing their fabric softeners depending on their mood or what they wash.

In some homes, each family member has his/her favorite fragrance. Yoriko Hashimoto (47) says, "My daughter insists on a fresh floral scent while my husband wants his clothes to smell like soap. I use a (rich) romantic fragrance or fresh citrus fragrance depending on my mood."

Yuko Hashimoto, 41, has eight different scented fabric softeners on her shelves. She lives with her three daughters and husband, and each have their own fragrance. Not only that, but whenever a new scented fabric softener comes out, they get one and the entire family evaluates it.

Among the eight items, Hashimoto has created her original blends as well, combining aroma therapy oils with citric acid, and other ingredients with unscented products. In fact, she is such a scent fanatic that she is now the "Aroma Guide" on the information site, All About, responding to numerous queries about fabric softeners.

P&G's Downy is said to have kicked off this scented fabric softener trend from around mid-2000, when mothers and home makers in their 40s who remember the Bubble Economy of the 1980s jumped on its sweet fragrance.

Double the Price, Triple Sales - Fafa
NS FaFa Japan Co., Ltd. (previously named Nissan Sekken), took it further by developing a range of "fragrances to be worn on clothing" concept. On top of that, the concept behind Fafa is "not one fragrance for the entire family, but individual fragrances for individual people."

The Fafa range has fragrances for everyone now - shown below are Fafa Baby, Fafa Dubai, Fafa Fine Homme, and Fafa Fine Beaute, among others. It was test launched online in autumn 2009, and has been steadily increasing fans since through word of mouth and online promotions.

Fafa's retail price starts at around 700 yen for a 600ml bottle which is almost double that of major brands. Yet, its sales have been tripling every year. 

The Next Step - Customize Your Own Fragrance
P&G is now taking scented fabric softeners to the next level - customization.

With Lenor, it has launched the Lenor Happiness Make Your Own Fragrance site:

Customers can adjust the amount of fragrance and blend fragrances through the site. 

Perfumers would probably seldom let amateurs take matters into their own hands to blend oils and fragrances, but with fabric softeners, that is the next stage in Japan. 


Reference: The Nikkei MJ 3 June 2013


Earning Points Is the Surest Way to Increase Spending Power

Points are now a currency and no one does that better in Japan than Culture Convenient Club's T-Point Japan who boasts a whopping 44.5 million members.

As at end March, 2013, T-Points can now be earned with 155 brands and 52,981 stores, and in this age of the thrifty-as-a-virtue-again consumers, one way to increase one's spending power is to make sure every yen goes to earn points, which are usually awarded at much more favourable rates than interest on cash.

And though once upon a time not so long ago, T-Point only accepted one brand/company per product category as partners, they have become less discriminate of late and has just announced that commencing on 21 May 2013, T-Point card holders can earn points for every 200 yen they spend online with Expedia.co.jp, according to the press release on 8 May 2013.

It is obvious that the very entrepreneurial and savvy Mr. Masuda saw no reason to build a ceiling in the blue sky of potential members and their point-earning universe, and lifted the early restrictions that justified the high premium T-Point demanded of its corporate partners to have the privilege of accessing their members and exposing them to ads at points of consumption to cross-sell. (When I was running a flash sale site, the first promotion proposal I received from Cultural Convenience Club, the owner of Tsutaya and T-Point, was for a 2-year exclusive deal at $1 million. And they told me that once the two years were up, they will open up to other flash sale sites like Gilt.)

Remembering that Japan has a population of 130 million, 44.5 million members means T-Points are being collected by 34% of the total population.

Once earned, T-Points can be exchanged for goods, tickets, and of course, be used to pay for CD and DVD rentals at sister company Tsutaya's outlets (Japan's version of Block Busters, in a nutshell).

T-Point also launched a service whereby members can donate their points in the wake of the 3.11 Great East Japan Earthquake and Tsunami, which was a novel way to collect donations and a further confirmation - if any are needed - that points are indeed a currency.

The Biggest Difference Between Rakuten and Amazon
One thing Rakuten does but amazon.co.jp refuses to do is award points for purchases.

Rakuten Super Points can be used in lieu of cash at an exchange rate of 1 point = 1 yen.

Rakuten offers favourable rates for Rakuten credit card users and vendors on the portal are invited to offer 5x, 10x, and higher rates of points for certain promotional periods and items instead of cash discounts.

Rakuten also has a system whereby miles earned on ANA flights or banking points earned at banks other than Rakuten Bank can be converted to Rakuten Super Points as well.

Rakuten uses points to get registered users to respond to questionnaires for research and to help their clients build up mailing lists by offering points for giving up your name and other personal details.

One thing I found interesting is that I can actually order a pizza with Domino's Pizza and elect to pay via Rakuten even if I am paying cash to the delivery person. This enables me to use my Rakuten points against my pizza order and earn more Rakuten points for the order itself. Since I go directly to the Domino's site or use the Domino's iPhone app because of incentives to do so (like buy one get one free or special discounts for ordering online), I often wonder what Domino's gets for this. It is almost like giving up your customer to Rakuten even though I am an acquired Domino's customer no thanks to Rakuten. Perhaps it is done in the hopes of ensuring that I stay loyal to Domino's and don't wander off to competition, but from where I am standing, it looks like a win for Rakuten and a lose for Domino's... But maybe I am missing something.

"Not Accumulating Points Is Like Throwing Money Away"
Points have become such an integral part of the way we spend and consume that a 44-year old friend says, "Now that I use my Rakuten credit card as my main card and earn points, all my utility bills are paid for on points alone. It's great! I buy things I would buy anyway, and the points are such a bonus."

A 60-year old entrepreneur who is very cash rich and still cash savvy says, "When I need to buy a book, I do my search on amazon but I buy it on Rakuten. I book my business trips and those for my staff on Rakuten Travel, and then use the points to buy other things. It is a really good system. I think amazon does a great job recommending things to me, but I will only buy on amazon if I cannot find the item on Rakuten."

Another entrepreneur, 42-years old says, "Whenever I see a great deal on bonus points for a credit card or site, I concentrate my spending on that card or site. It is foolish not to do that today because it is like throwing money away. Taking a little time to search and check for points creates money out of thin air!"

Free Mobile Phones Every 3.5 Years?
According to Garbagenews.net who visualizes government data into graphs, the average period a Japanese subscriber uses a mobile phone has declined to 3.5 years in 2012, from 2011's 3.6 years. The top reason for changing phones in 2012 was "to upgrade" (42.8%) - most likely to a smartphone; which was much higher than "due to the phone needing repair" (32.2%).

The number of years before users get new mobile phones in Japan
(Data based on Cabinet Office Report)
Phone companies also award points for every yen spent on their services, and my parents never pay cash to get a new phone, but rather, use their points. I have personally put them on the cheapest possible plans that meet their usage profiles, so combined, they spend less than 7,000 yen per month on their mobile phone bills. And still, every three or four years, they both manage to get new phones on the points they earn.

Japan managed to get mobile phone ownership to spread like wildfire in the early days when hardware was given away for 0 yen (because the retailers were given cash backs on the subscriptions the consumers took out). We still see a few 0 yen phones on the display cases, but consumers don't seem to mind the price tags much, because they just use their points to get what they want.

I am a heavy data user who has the largest fixed data plans and hardly use the mobile to have conversations except when we are on SKYPE or LINE. But my last upgrade on both the BlackBerry and iPhone were paid for by points with Docomo and Softbank accordingly after less than three years of usage.

Earn Frequent Flier Points With Banking
ANA, a member of Star Alliance, is an airline, but it also has its own branch with Suruga Bank.

Account holders can earn frequent flier miles in addition to interest for all their banking activities with Suruga Bank and purchase products like a term deposit with additional interest and miles.

As with Rakuten Bank, extra points are awarded to the account holder just for designating their account to receive their monthly salaries or to link automatic debit payments of utilities and subscriptions to the account.

While Rakuten Bank is an e-bank, Suruga has a retail network, though the ANA Branch is a virtual branch.

No Income Tax, No Inheritance - So Far
So far, the Japanese tax man has not demanded that points be declared as income, but rather, focus on collecting consumption tax, which is soon to go up, regardless of mode of payment.

While mobile phone points may be shared among family members and award tickets bought on frequent flier points can be booked for family members, there is no "inheritance tax" associated with the movement of points at this time. (I will need to do more research to find out, but I believe  once the natural person owning the accounts pass away, I believe his/her points expire and cannot be transferred to another person be it a spouse or other family member.)

But points are definitely here to stay and is a real currency and that through which banks now compete with an airline and virtual cash is created even through brick and mortar transactions.

Chinese Noodles, Issey Miyake, and Hokkaido - The Reasons Why 70% More Thais are Visiting Japan

According to the Nikkei Marketing Journal dated 10 May 2013, Japan saw a 70.1% increase over the previous year of Thai tourists in the month of March. They are making up for the decline in Chinese tourists due to the Senkaku Island dispute and other elements increasing their anti-Japanese sentiment.

The Kamakura-Yokohama-Tokyo Tour
A journalist joined a tour from Thailand with 10 participants who were in a wide range of occupations from agriculture to banking.

The tour first took them to Kamakura, where the strongly religious Thais visited the famous sitting Buddha.
"Thai Buddhas are made of gold and shiny, but Japanese Buddhas are more toned-down. Their austerity makes me feel more serene as I visit them, " one participant said.

Next, they went to the Shin Yokohama Ramen Museum, which has seen a 57% increase over the previous year of Thai visitors. This restaurant complex is set in a retro, mid-1950s interior and just about every tour from Thailand includes this spot. (A quick look at the official site shows Thail as a language option to navigate the site as well as both simplified and traditional Chinese and Korean.)

Staff at the Ramen Musem claims that the majority of Thai visitors prefer the "tonkotsu" or soup made of pig bone marrow noodles, which is a specialty of the Kyushu region.

The highlight of the tour is a visit to the Issey Miyake flagship store in Aoyama, in Tokyo. In particular, the Bao Bao Issey Miyake bags were in high demand because it is renowned that the Queen has one.

"One of the key objectives of joining this tour this time was to buy one of these bags," says a 37-year old man who got one for his girlfriend. "I am delighted that it was cheaper than I had expected it to be," he added.

Image from Farfetch.com 
That night, the tour stayed at a hotel in Ikebukuro's Sunshine City. After checking in, the tourists were given free time, which they took full advantage of, by visiting such popular shopping destinations as Tokyu Hands, Matsumoto Kiyoshi, and ABC Mart.

A 46-year old lady who was on the tour with her husband splurged on 30 packs of a Shiseido face cleanser.
"I cannot get this in Thailand," she said. "I did my research online before this trip so I am so happy I could get this."

The tour guide for the group commented that most of the tour participants stay out until the shops close to shop.

Businesses who receive these Thail tourists have commented as follows:

1) LAOX (Electric appliance store chain): Thail tourists like Japanese watches like those by SEIKO and available duty free. Prices vary from around 10,000 yen to 300,000 yen, and most buy for themselves, not as gifts.

2) JTB (Travel Agent): Unlike Chinese visitors who chose to visit Japan as their first overseas destination, Thai tourists are experienced travelers who have visited neighboring countries before, so they are not as interested in shopping as the Chinese. Instead, they are very interested in the changing seasons of Japan and like to visit locations where they can enjoy cherry blossoms and Japanese maple in their best seasons. In terms of souvenirs, they like sweets like "Tokyo Banana" that are only available in certain places.

3) Takashimaya Shinjuku Store (Department Store): In addition to the European brands, Thai customers like Issey Miyake's Bao Bao. Because it is widely known that the Queen has one, they sell very well. Average purchasing value by Chinese customers is around 100,000 yen and visitors from Southeast Asia, including Thai customers, is around 95,000 yen.

4) Seibu Ikebukuro Main Store (Department Store): There was a 40% gain over the previous year for duty-free sales from 1 through 14 March this year. A significant contributor to that growth is Thai customers. The core spending value is between 600,000 yen and 800,000 yen in Hermes goods. Thai customers do not speak much English, but they are very polite and a pleasure to serve.

Highly Coveted Destination - Hokkaido 
Hiroshi Masuda, the head of the Japan National Tourism Organization, in Bangkok is quoted as saying that "Japan as a destination is becoming increasingly popular with Thai travelers, and in particular, Hokkaido." The organization has a customer inquiry desk for people who want to travel alone to Japan, and the desk receives inquiries about Hokkaido almost daily.

The boom started in 2009, when a popular model was photographed at various locations in Hokkaido in summer with lots of flowers. Ever since then, "Hokkaido has become an aspirational destination for the flower-loving Thais," says Masuda.

This was further boosted when a direct flight between Bangkok and Chitose Airport of Hokkaido commenced operation in October 2012. Thai Airlines, who operates the flight, had initially expected 50% of travelers to be Japanese, 40% Thai, and 10% from neighboring countries, but thanks to the weakening yen, 60% of the travelers are Thai since January this year.

CEO of Bangkok based Asahi Travel Service who offers tours to Japan, Jiro Mimoto, says, "from May onwards, trips to Hokkaido are so popular, it is becoming difficult to secure seats on direct fligthts, " with surprise.

"A frozen lake? I have never seen such a thing in my life."
In Kushiro city, Hokkaido, a couple visiting snow covered Lake Akan said, "We could never experience this in Thailand. Families and young people would love this!"

They are actually journalists invited by the local tourism association. As the decline in Chinese visitors became obvious, the association targeted Thailand.

The journalists visited the newly build Snow Park next to the ski resort situated alongside Lake Akan.

"The Thais love snow! It is not so cold in April and yet, we can still play in the snow. I think if advertised right, this could become more popular than the Snow Festival (in February)."

Reference: Nikkei Marketing Journal cover story for 10 May 2013


There is Cloud for Computing and "Clean and Store" for Virtual Closet Space in a Country Where the Average Apartment Is 25 sqm or Less

Cloud computing has made its mark to expand your digital storage space both at home and work.  In a country where the average apartment for singles is 25 sqm or less, according to a questionnaire by popular young adults free publication R25, there is virtual closet spaces you can hire "for free" when you get your boots, futons, and coats cleaned.

A typical one-bedroom apartment is 21 to 25 sqm and costs around 60,000 yen per month to rent

Some companies call it e-closet, as in the case of Kikuya, a professional dry cleaning service chain, and others have more analogue names.

The idea is basically the same: send for a box or bag for your boots, futon, coats and other garments, have them dry cleaned and they will store it for you until next season at no extra charge! Yes, you read it right - consumers pay for the dry cleaning, which is anywhere from 1,000 yen to 5,0000 yen, depending on the item and the number of items you send - and storage up to 6 months is thrown in for free!

Professional storage not only helps ease up space in the cramped abodes, but also reduces risk of mold and other unpleasant incidents during the off season.

With public transport being the main mode of commute for most urban dwellers in Japan, dry cleaners large and small offer free pick up and delivery. With dry cleaning prices being so low - a business shirt can be cleaned and pressed for under $2.00 per item - the overhead for the pick and delivery must be a huge drain on the bottom line but a cost of doing business.

And cleaners are not the only ones in this game. Shoes and bags repair chain Mr. Minute has also launched a repair, clean, and store service for boots. They offer three courses:

  1. Clean and store
  2. Clean, repair and store
  3. Clean, recolour and store
Prices start from 1,980yen for a woman's smooth leather shoe/boot.


Research Report: Time Limited Sales Effective for Acquiring New Customers And Customers Compare Prices Both On Site and At Other Sites Before Buying

Just System Inc's online survey service Fastask released a report on findings on consumer behavior and attitudes towards Time Limited Online Sales.

A total of 750 responses were collated from people who have actually shopped at an e-commerce site offering time limited sales; 150 each from each age group from those in their 20s through to 60s.

Overall, 77.5% of respondents actively seek out time limited sales information on one or more e-commerce sites.

Their preferred mode of acquiring that information is by registering for e-mail updates (78.0%) as well as regularly visiting the sites (68.2%).

In terms of the now popular "Big 3 SNS services" of Facebook, Twitter, and LINE, 12.0% said they are fans of their favorite companies on Facebook, 10.2% follow the official Twitter accounts, and only 7.2% said they befriend the brands on LINE. This may merely be a reflection of the take up of the services by the brands and companies themselves. LINE's official accounts are far fewer than those for Twitter or Facebook. 

Time Limited Sales Attracts New Loyal Regulars?
Interestingly, for e-commerce sites that the respondents used for the first time through time limited sales, only 20.4% said they will not or are likely to not go back to the site to shop at other times. 60.8% said that they will go back to the site to see if they are offering time limited discounts again in the future.

Combine this finding with the preferred method of gathering information on time limited sales, and it is obvious that such events enables a site to beef up their mailing list. 

Furthermore, 63.6% said that if they shopped for the first time at a site through a time limited sale, they are likely to go back to that site to shop even when there are no such time limited offers available.

Is this percentage worth the "cost" of acquiring these customers?

In terms of sites that they are familiar with, 53.3% said that if they take advantage of time limited sales on that site, they may visit that site more frequently in the future. Only 21.9% said that shopping at time limited sales on such sites means that in the future, they are likely to only shop while such offers are available on that site.

53.5% Say Securing Bargains is Worth Sharing on Social Networks
Asked if they tend to share the excitement about buying something at a time limited sale, 12.3% said they "strongly agree" and 31.2% said they "somewhat agree." 21.3% were neutral and 35.2% said they tend not to share or that they do not share such information with friends.

Not surprisingly, sharing tendencies were higher among those in their 20s and 30s (see below)

Purchase Drivers - The Time Left or Quantities?
According to the responses, the amount of time left and the quantities of goods left are equally impactful as purchase decision drivers.

The pie charts below show the overall average responses, but it may be worth noting that for those in their 20s and 30s, they are 38.7% and 38.0% accordingly, more likely to purchase something if the time left or quantities available become sparse at a time limited sale, which is higher than the other age groups. (The percentages are a total of those who said "strongly agree" and "somewhat agree" for these age groups.)

What Do They Expect/Want in a Time Limited Sale?
1) Does a time limited sale imply to them that the goods are more discounted than otherwise?
75.7% said yes.
And 69.7% said they would actually check other sites for the prices of the same goods before deciding whether to buy at that site or not.
75.7% said they would check the regular selling price (not the recommended retail price), i.e. the price at which the goods are sold when the time limited sale is not on, before making the purchasing decision.

Note that transparency is king here, and note that the consumers have a tool that enables them to do the necessary research in only a few clicks.

2) Do they use these time limited sales to acquire goods to re-sell at auctions?
69.6% said no.

3) Do they want shorter sales periods in exchange for steeper discounts?
46.6% said yes and 37.6% said they were netural about that.

4) Are time limited sales "unfair" because the only variable is timing?
29.3% said yes, and 39.5% said they feel neutral.

5) Would they accept additional discounts in exchange for paying COD (cash on delivery) or making an electronic money transfer payment directly from their accounts in advance?
33.9% said yes and 26.1% were neutral.

Perhaps it is very characteristic of Japan that more than 30% of buyers are comfortable with paying in advance or paying COD. It may be worth noting that COD handling charges are often passed on directly to the consumer. Private courier Yamato's collection service starts at 315 yen per transaction for lower priced items under 10,000 yen; then goes up to 420 yen for shipments priced 10,000 yen to under 30,000 yen; and so on. Amazon Japan's COD charges are much steeper to discourage this payment method, however. 

For more details see: http://www.yamatofinancial.jp/en/service/por/index.html

6) Would it be attractive to be able to secure an item for 24 hours before making the purchase?
(A service quite common in brick and mortar stores)
59.5% said yes and 21.3% said they are netural to this.

7) If the last remaining item at a time certain sale was available on auction starting from 0 yen, would that be appealing?
63.2% said no, and 23.9% said they are neutral to this.

8) Of the currently available discount items, what do you find attractive? (multiple answers)
1. Outlet sales and second rate quality discounts   72.0%
2. 10x, 5x and other additional loyalty points sales   68.1%
3. Discount coupons   59.2%
4. Limited period sales that last more than 24 hours   56.1%
5. Time limited sales that are under 24 hours   57.9%
6. Free shipping over a certain purchase value   54.5%
7. Discounts based on promises to write reviews after purchase   41.7%
8. Limited quantities only sales   39.9%
9. Multiple purchase sales (purchasing more than one item)   29.2%
10. Mobile phone only sales   11.9%
11. None of these appeal to me   2.7%

9) Of the items chosen in 8) above, which is THE MOST attractive discount practice for you?
1. Outlet sales and second rate quality discounts  31.0%
2. 10x, 5x and other additional loyalty points sales   21.1%
3. Discount coupons   13.0%
4. Limited period sales that last more than 24 hours   8.1%
5. Time limited sales that are under 24 hours   7.7%
6. Free shipping over a certain purchase value   7.3%
7. Discounts based on promises to write reviews after purchase   5.3%
8. Limited quantities only sales   4.2%
9. Multiple purchase sales (purchasing more than one item)   1.9%
10. Mobile phone only sales   0.4%
11. None of these appeal to me   0%

There were no variances among age groups for 9) above up to number 3, but perhaps it is worth noting that for those in their 30s and 40s, "discounts based on promises to write reviews after purchase" rated 5th and 4th accordingly and free shipping ovr a certain purchase value rated 4th or 5th for those in their 40s, 50s, and 60s.

Food and Beverages are the Most Popular Purchase Items at Time Limited Sales
In the multiple answers section for items purchased, food and beverages ranked highest at 46.0% of respondents having purchased such an item.

The other items rated as follows:
2. Fashion Items   37.6%
3. Sundry goods   37.2%
4. Electric appliances 30.4%
5. Computers and accessories   29.2%
6. Cosmetics 14.9%
7. Sports and outdoor goods   12.4%
8. DVDs and CDs   12.0%
9. Books and magazines   11.1%
10. Others   6.1%

Once again, it is worth noting that for those in their 20s and 30s, fashion items rank the highest at 54.0% and 50,0% accordingly.

It is also interesting to note that for those in their 60s, food and beverages rated 61.3% and was by far the highest with sundry gods at 38.0% and computers and accessories at 29.3% ranking at distant numbers 2 and 3.

In the future, items they want to purchase rated as follows:

1. Sundry goods   54.5%
2. Food and beverages   53.5%
3. Electric appliances   51.3%
4. Computers and accessories   46.5%
5. Fashion items   43.3%
6. DVDs and CDs   29.7%
7. Books and magazines   28.9%
8. Cosmetics   25.5%
9. Sports and outdoor goods   20.3%
10. Others   3.3%

Reference: Original Japanese report PDF download page: http://selectbox.shoeisha.jp/article/278


"Girl" is the Buzz Word

First, it was ELLE, who launched ELLE Girl

Elle Girl always has an overseas celebrity on its cover.

Before Blake, it was Kristen Stewart, and before Kristen, it was Taylor Swift.

Obviously, the selction for the cover girl shows the target age group.

Next came VOGUE Girl...

VOGUE has been casting Japanese models and actresses on its cover.

But the target age group is the same as those for ELLE Girl.

And today, I received a copy of Peach John Girl.

And given that Peach John is the "Victoria's Secret of Japan,"

it is easy to see that "Girl" is the buzz word du jour.

Girl is a State of Mind, not Age

Though the cover girls speak volumes about the target age group and lifestyles/fashion preferences, once inside the cover it is obvious that Girl is actually a state of mind and not necessarily an age group.

Sure, the publications do not talk about anti-aging remedies and cosmetics, but the advertisers are not always the second line and VOGUE often features "high and low styling" where they match up haute couture brands with more up and coming ones like CHANEL x Acne.

I was quite impressed that the health related articles in VOGUE Girl went into some very serious advice on sensible and healthy eating, like "choose whole grain rice over bread and pasta to prevent blood sugar levels from rising too quickly."

Japan seems to forever be the market where youth and a "girly mindset" remain not only acceptable, but even preferred or seen as aspirational. Initially, I was inclined to think "and this, despite the rapidly aging population and there being more dogs than kids under the age of 15," but then again, perhaps it is more accurate to say that it is because of this that youth and being girly are so desirable. 


Affordable Same Day Delivery is Coming - Yamato Holdings CEO Interview "We Aim to Be No.1 Not the Only One"

Yamato Holdings CEO Makoto Kigawa spoke to the Nikkei Marketing Journal.

Yamato has continuously upped the ante for home parcel deliveries while keeping prices reasonable. It is no exaggeration to say that they have made date and time certain, refrigerated and frozen goods parcel deliveries a part of the "universal service obligation" of anyone who wants to do home parcel deliveries - including Japan Post (who now offer date and time certain deliveries at no surcharge and refrigerated and frozen parcels deliveries as well).

They have number one market share and they still lead in such areas as offering pre-advice to registered "Kuroneko Members" by email with a link for them to change the date and time of delivery of the expected parcel(s).

Kigawa and Yamato now have "same day delivery" that costs the same as a normal next day delivery parcel in scope, among other services and remember - they don't keep their innovations confined to the more than 3,000 islands of Japan. They have international aspirations and will bring affordable value-added home parcel deliveries to your market soon!

### From the Nikkei Marketing Journal 8 April 2013 ###

Yamato Holdings delivers close to 1.5 billion TaQ-Bin parcels a year. Their greatest strengths is in new product development that is driven by innovation. "Cool TaQ-Bin" (refrigerated and frozen parcels delivery) and date and time certain deliveries are now the norm. New services include next day delivery of e-commerce goods ordered in the early hours of the night in limited areas. Such consumer needs driven services are boosting sales. The overall parcels market feels as if it has come to a stagnant growth stage, but Yamato always seems to be one step ahead. The Nikkei Marketing Journal spoke to CEO Makoto Kigawa to find out what their secret is to continuously develop new services that consumers want.

(The byline of the article is Toru Shimoharaguchi)

Nikkei MJ: The small courier parcels (TaQ-Bin) market saw negative growth from 2008 to 2009. Has the market reached saturation point?

Kigawa: The shrinking population and other elements contribute to a sign of slow growth, but we continue to secure positive growth. Small packet logistics is recovering as the shipping lots get smaller and frequency of shipments increase. The driver is e-commerce. Japanese e-commerce enjoys a very good reputation for quality. It is a role model for other overseas markets.

Nikkei MJ: Yamato has always created new businesses, but are you able to differentiate yourselves from your competition in the e-commerce market?

Kigawa: If we were not in business, I doubt Japanese e-commerce would have enjoyed such a great reputation. Our home delivery system, the "cool TaQ-Bin," speed of collection, returns and payment processing and other value-added services that we created has contributed to the rapid growth of e-commerce, I believe."

Expansion of "Same Day Delivery" among Tokyo, Nagoya, and Osaka Areas in Scope
Nikkei MJ: The growth of e-commerce and the evolution of parcel delivery services in Japan have changed the way our consumers shop.

Kigawa: The golden time for e-commerce is in the late hours of the night. Thanks to the proliferation of smartphones, orders have also increased during commuting times and lunch hours. Such lifestyle changes are rife with new real consumer needs. What is important for us is to get very serious about creating convenient services that meet such requirements.

Our TSS (Today Shopping Service) is a new service whereby goods ordered in the late hours of the night can be delivered the next day at 8 am. We offer this in limited areas only at this time. The shortest lead time to delivery is four hours. Consumers have indicated that this is very convenient for them, but what is more, the sellers are delighted by it.

Because the goods are delivered quickly, the buyers have little time to change their minds. And this means there is significantly less returns. Returns are significant costs. It requires people to manage it and space to process it. By reducing returns, sellers can increase the products they offer and this brings more customers."

Nikkei MJ: Yamato is famous for next day delivery, but now you are evolving into same day delivery.

Kigawa: We are probably the first to actually name the product as a "same day serive" or "Today Shopping Service." TSS is a system that enables sellers to operate e-commerce with same day delivery as their unique service offering. This changes the way customers perceive them and shop; and the sellers can promote their service with this unique attribute more and more. As this gets more exposure, it will need to be more than the current limited areas only service, so we will evolve our network.

Nikkei MJ: We understand that you endeavor to start same day TaQ-bin services between Tokyo-Nagoya-Osaka areas in fiscal 2016.

Kigawa: In August this year, we will establish a logistics center we call a gateway base for the Kanto area in Atsugi city of Kanagawa prefecture. We will show you this year how the network that will enable same day delivery in the Tokyo-Nagoya-Osaka areas will look like. First we will set up the system for the Tokyo area, and then expand it to the Chubu and Kansai regions. Fiscal 2016 is the last year of our current medium-term plan, and by then, we will be able to operate same day deliveries on a stable basis."

Nikkei MJ: It seems there is no end to service evolution.

Kigawa: Whether or not services will become popularly used is dependent on cost. Even today, if you really want to do same day delivery, you can get that if you pay 15,000 yen or more. What is imperative is to create a same day service that is priced at the same as what we charge for TaQ-bin today."

Empowered Front Line Managers Create the Seeds of New Services
Nikkei MJ: How do you actually look for new services to develop?

Kigawa: In the front line, our people focus on understanding what is inconveniencing our customers. We have 60,000 delivery people meeting customers every day and listening to them. What makes Yamato unique is that we are focusing on service development from the perspective of the recipients. We speak to the consumers and try to understand how we could solve their problems.

The "seeds" that are collected by our front line staff is first tended to by the creativity of our branches and outlets. The front line managers are empowered to do this.

Whenever they solve a problem or inconvenience for a customer, it is shared in the "Solutions Lab" in our database. Twice a year, good solutions are shared at the regional companies basis and then taken to headquarters for further discussions and development. We then standardize them so that they can be rolled out as services or products on a company wide basis."

Nikkei MJ: What is the most important thing when it comes to creating a product?

Kigawa: There is no way to develop a hit product by taking what we can do today and pushing it to our customers. That creates a gap between what the customer needs and what we can offer. I think it is common to say 'create a product only you can deliver,' but if you just want some self-gratification, it is easy to create new products.

Nikkei MJ: Even if you create a new product that responds to a real customer need, competitors are quick to follow.

Kigawa: Because they follow, the product or service quickly becomes more than a niche. Yamato aims to be the absolute number one in these markets. We don't aim for the only one, but to be number one is what is important.

Nikkei MJ: Yamato has a successful history in leveraging deregulation to generate new growth. Are there any particular areas you are looking at, at this time?

Kigawa: When deregulation is realized for pharmaceutical and medical supplies sales, there will be a great market opportunity. This is an area where the citizens of Japan have many challenges and inconveniences. And the distribution system for medical supplies is archaic. Even if prescriptions can be made remotely and delivered to homes, that would create new demand throughout Japan. I have no intention of saying that the express parcels market in Japan is saturated."


Japanese Electric Appliance Giants Respond to Amazon with Same Day Delivery and Free Installation

Google started same day delivery of groceries in the San Francisco area to compete with amazon in a bid to win back "search traffic" from amazon. It was a interesting learning to see what could trigger a search engine to want to get in to the same day delivery logistics "game"...

In Japan, for the home appliances business, competing with amazon is a more direct and easy to understand formula - amazon has been stealing their cake and they have to do something about it.

Free Same Day Delivery and Free Installation - You Can't Get That at Amazon
From 1 March 2013, Japanese electric appliance retail chain, Yamada Denki (1.8 trillion yen turnover for the period ending March 2012, down from 2.15 trillion yen the previous year), has commenced same day delivery of goods ordered before 15:00 from their closest brick and mortar store, with free installation and advice on the newly purchased goods. Yamada will call the consumer before delivery to set up the ideal delivery time.  According to the Nikkei Marketing Journal, though the service is new, there are approximately 1 to 2 orders per store a day already. That is huge, considering that they have approximately 800 directly operated stores and a total of 5,383 stores as at the end of March 2012 including franchises.

In the event that the item ordered is not in stock at the retail outlet, the item will be shipped from the warehouse and delivered by a courier, in which case there are no installation or instruction services. This inconsistency is a bit troublesome, but since Yamada says they hope to deliver 80% of online orders through this direct from store system in the near future, this may be resolved.

Yamada now has big posters blaring "Yamada will offer the best price, even in competition with online prices by other retailers," in their stores and on their advertisement. This is clearly in response to all the consumers who flash the amazon site on their smartphones to negotiate discounts.

Noboru Yamada, Chairman of Yamada Denki has confided in the Nikkei MJ that "amazon has become the price leader in electric appliances, and has been taking market share. We cannot ignore this. I have now instructed my staff to sell in competition with amazon even if their retail price is cheaper than our procurement price."

Perhaps even more aggressive on price competition than electric appliance stores are camera stores in Japan. I was a sales rep for Olympus selling cameras to such stores from 1989 through 1995 (long before Olympus's window-dressing fiasco), and I had first-hand experience of the cut-throat competition that was played out among Yodobashi, Sakuraya, and Bic Camera. For them, the loyalty points is the key currency used to make up for what they cannot offer in raw yen terms.

Yodobashi now has systemized a pricing mechanism that enables them to sell at a lower price than amazon in real terms when the points given to the consumer is taken into account. Senior management at Yodobashi implies with the Nikkei MJ that they have designated staff checking the amazon prices in real time to ensure that the stores are up to date at point of sale prices. (Back in the days when I was at Olympus, they sent out staff several times a day to their competitors' stores to check the prices on the hottest items. They have institutionalized competitive price checking long before Kakaku.com and other digital tools made it a click away.)

Yodobashi has even commenced selling books from February 2013, and offers a 3% point back for them.

In addition, like amazon, Yodobashi offers free shipping, but does better than amazon in the major metropolitan areas where same day delivery is offered free of charge. And they have not been shy about trumpeting the difference between amazon and them whereby amazon charges for shipping unless you are a membership fee-paying PRIME customer. Yodobashi's warehouses are located in Kawasaki and Kobe, and shipments originate from one or the other.

Yamada's Chairman does not see Yodobashi as direct competition, however. He says, "we each have our own turf." And perhaps that is true - for now. Yodobashi's 21 stores are no match for Yamada's 800 directly operated stores, and while Yodobashi stores are concentrated in urban areas near terminal train stations, Yamada's stores are predominantly road side suburban stores. 90% of Yodobashi's orders received are within the urban delivery areas that qualify for same day delivery.

Amazon's Japanese turnover in 2012 was 7.8 billion dollars or approximately 700 billion yen in 2012, up 18.6% from the previous year. The electric appliances retail industry estimates that approximately 30% of that is in appliances, which would come to around 200 billion yen. The electric appliances stores boast in excess of 600 billion yen in sales on a consolidated basis, so their purchasing power is far mightier than that of amazon. But amazon't strong growth in amidst the shrinkage seen by the electric appliances stores (due mainly to the fall in television set sales) is a sure threat.

In terms of online sales, Yodobashi is at around 50 billion yen while rival Bic Camera is at 60 billion yen. Yamada has not made their figures official.

Of the key major players in this field, only Yamada and Yodobashi seems to be competing full-on with amazon at this time. Bic, Edion, and Joshin are selling through amazon while K's HD sells Kindles in their stores. (Yamada and Yodobashi do not.)

Amazon is preparing to open its largest logistics center in Japan yet - a 18,000 square meter warehousing facility in Odawara city of Kanagawa Prefecture, their 12th, within this year. Amazon has officially said that "there are no plans to cut back on our electric appliances offer" so how they will leverage this new location and expand their procurement capabilities is yet to be seen.

How Cheap is Amazon Any Way?
The Nikkei Marketing Journal published in their cover story on 3 April a price comparison of some popular items comparing the listed prices on Yamada Denki's online store, Yodobashi.com, and amazon.co.jp:

1) Canon EOS M (Camera body only)
    Yamada: 48,800 + 5,368 points (actual price: 43,432 yen)
    Yodobashi: 48,800 + 4,880 points (actual price: 43,920 yen)
    amazon: 44,359

2) Sharp Water Oven AX-CX3 (steam oven and microwave)
    Yamada: 30,960 + 3,405 points (actual price: 27,555 yen)
    Yodobashi: 39,800 + 3,980 points (actual price: 35,820 yen)
    amazon: 27,625 yen

3) Panasonic SD-BMS 105 (bread maker)
    Yamada: 19,900 + 2,189 points (actual price: 17,711 yen)
    Yodobashi: 19,600 + 1,960 points (actual price: 17,640)
    amazon: 17,816 yen

4) Toshiba Light Tech (E-core) LDA9L-D-G (LED light bulb)
    Yamada: 2,350 + 258 points (actual price: 2,092 yen)
    Yodobashi: 1,960 + 196 points (actual price: 1,764 yen)
    amazon: 1,782 yen

At Yamada, shipping is free of charge for purchases over 10,000 yen and orders received by 15:00 qualify for same day delivery by store staff from nearby stores. Yamada also responds to inquiries through online chat, and may agree to further discounts if other stores like amazon are offering lower prices.

At Yodobashi, delivery is free of charge and in major cities, same day delivery may be possible if orders are received by a certain time.

At Amazon, PRIME members enjoy free shipping, but other consumers may enjoy free shipping as well, except for express delivery, which comes with a 500 yen surcharge or date certain delivery which costs 350 yen.

The Nikkei MJ says they tried to compare prices of PCs, refrigerators, and washing machines as well, but it came to light that amazon does not sell most of the best selling ranges in these categories by domestic brands, so the Nikkei MJ gave up on those categories.

### CarpediemJapan Comments and Observations ###
As mentioned in the article, points are a key currency now and has proven to become a powerful price negotiating tool for the likes of Yodobashi, as well as a loyalty tool for Rakuten. But amazon has never gotten into the loyalty points game. And from the price comparisons, it is obvious that amazon prefers to offer discounts up front to reward customers now rather than later, and as they are now the largest e-tailer in Japan, it has paid off in winning loyalty as well.

Looking at the site, I have always been amazed at how much more advertising amazon is getting from outside of amazon...

According to Media Radar, Amazon's advertising prices for October through December 2010 starts from 500,000 yen for a top rectangle space with 4 million impressions guaranteed to a marquee push down, full jack package guaranteeing 10 million plus impressions for the top marquee (where you see the pink marquee ad for a set of books here), 10 million plus impressions for the top rectangle A (where you see Pepsi here), and 100 million plus impressions for the site wide mini marquee for a week costing 17,500,000 yen.

I personally know a number of people who claim to do their searches for books and entertainment on amazon, but buy on Rakuten to get the points, unless the price is significantly lower on amazon.

This explains why Google in the US feels threatened by amazon as a search engine.

Rakuten now has a Rakuten Search add-on, which enables users to earn points for searching on Rakuten and not on other search engines... Google must be really worried there, too!

Convenience has always been highly sought by Japanese consumers and that is why we have so many thriving convenient stores that operate 24/7 (most of them anyway) where they are not the cheapest options, but the most convenient places to shop.

I personally feel the fall of retail giant Daiei began with the Great Hanshin Earthquake in 1995, but as the once great retailer fell to come under the management of a once rival, Aeon, and the recent developments in the Shibuya area with yet a major department store closing, this time in Tokyo and not a rural city, it is obvious that the retail scene in Japan has changed for good.

I will deep dive into this in another article, but in a nutshell, convenient stores are great places to shop because there is a limited choice and there is no paradox of choice happening there. Consumers accept the limited selections in exchange for convenience of time and location to shop.

While some giant electric appliance stores are taking over locations from department stores and teaming up with UNIQLO, the cities are obviously not big enough for all the existing players now. So looking to utilize the brick and mortar assets to enhance the online shopping experience is probably a wise move and perhaps the fast take up of Yamada's service is a good indication of that. But whether Yamada's and Yodobashi's decision to fight with amazon head-on will pay off, or whether the odds will be better for those who have decided to join amazon if you can't beat it, is an interesting game to watch.


Cheaper, More TLC, and Same Speed - Yamato's Edge over DHL and Other Couriers

Japanese private courier Yamato does not have a monopoly on express delivery of small packets to Asia - the likes of DHL and FedEx have their own planes and operate their own hubs to do just that. So what makes Yamato so confident against DHL, FedEx, and one-time and long time joint venture partner UPS?

The quality of service? Prices?

15,900 yen vs. 6,450 yen
DHL has over 30% market share in the Asian international express courier market. Anything they pick up from Japan can be delivered on the following day at most Asian destinations.

Put it in a standard box where each of the dimensions (height, width, and depth) is less than 30 cm, and DHL will charge you 15,900 yen per shipment.

If you gave a 10 kg parcel with the sum of the three dimenstions being less than 100 cm to Yamato as a business client based in the Kanto area, you will pay 6,450 yen.

If the lead time is the same, that is a significant price difference.

Up to now, such price competitiveness has been the domain of posts and EMS, but EMS is a "deferred service" and will take 2 to 7 days... PLUS, a 10kg EMS parcel to Asia ia 10,200 yen!

How did Yamato manage its rock bottom prices?

Even for next day delivery, Yamato will not change its operations and will use ANA for the line haul to keep costs down. DHL has its own fleet based in Narita International Airport, Kansai International Airport (Osaka), and Chubu International Airport (near Nagoya), and hubs out of Hong Kong.

In the Nikkei Marketing Journal article, Yamato has revealed that items collated at the Rakuten logistics facility or collected in the Kansai region will depart on the 0:00 flight out of Haneda (Tokyo) to Naha, or the 0:05 flight from Kansai International Airport (Osaka) to Naha, Okinawa.

The former arrives at 2:35 am and the latter at 2:10 am.

After clearing export customs,
a 3:20 am flight to Shanghai will take the goods and arrive at 4:25 am.

a 5:15 am flight to Hong Kong arrives at 6:50 am.

a 6:25 am flight to Taiwan arrives at 6:55 am.

With these arrival times at destination, delivery within the same day or next day from arrival is possible.

Japan Post uses a range of carriers from JAL to ANA to other airlines, and goods depart from various gateways directly from the Honshu Island, and not Okinawa. The delivery at destination is by their postal counterparts with intra-postal rates in Asia determined through bilateral agreements on a commercial basis as EMS is not part of the "universal service obligation" which designates the right to communicate by mail a universal service that a country must guarantee to all its citizens at affordable prices. Yet, sadly, Yamato has the competitive edge on pricing (though restricted to business customers).

Applying Japanese Standards in the Way Parcels Are Handled
In Asian cities, it is common for a single vehicle to be operated by a single driver to keep costs down. But the standards applied to the handling of parcels can be quite lax, with throwing parcels into the back of a truck being the norm.

"Even global couriers are rough compared to the way Japanese couriers handle packages," says a logistics consultant interviewed by the Nikkei Marketing Journal.

Yamato Broke Ground in International Perishables Deliveries
DHL has not yet commenced delivery of food items from Japan to other Asian destinations, which gives Yamato an edge.

Japan Post and Singapore Post as well as Japan Post and Hongkong Post have teamed up to follow suit, but tests do not commence until April 2013.

Yamato and other Japanese couriers are far behind DHL, FedEx, UPS, and TNT in terms of international expansion, but they are tackling it in a very different way and may very soon become serious forces to be reckoned with.

Related article:
Fresh Seafood Direct From Japan to HK - Chilled and Frozen Shipments in 1 to 2 Days

22 March 2013 Nikkei Marketing Journal Cover story

Working Women's "It" Bags Get Heavier - Average is 3.9kg, 1.4kg HEAVIER than 2012

50.4% of working women surveyed online by the Nikkei WOMAN Official Site (634 respondents) say they own a smartphone. That is more than a 20 percentage point increase from 2012, and the first time more than 50% own one. 8.9% said they own a tablet PC, up from 6.2% the previous year.

So why in the world are working women's handbags getting heavier?

It has become tradition for Nikkei WOMAN to run the story that shows what bags real working women are using and what they carry inside them. This year, the featured women in the article seem to be carrying an average of 1.4kg more than last year, with the average bag (complete with contents) weighing 3.9kg.

In the last couple of years, "Danshari" - a movement spearheaded by self-proclaimed Clutter Consultant and the latest clean up guru, Hideko Yamashita - has been the in thing and everything from fashion to popular celebrities to dining out has been shifting towards "simple chic." So it seems the editorial staff were expecting bags to get lighter. But they were wrong.

The reason is three-fold:

1. Digitalization

2. Conservation or saving

3. Preparing for the worst

Let's look into each of them and their impact in detail:

Digitalization Means More Digital Gadgets and Peripherals
Women who work in PR, consulting, sales, and other roles that require them to go out for meetings has them carrying PCs, smartphones, digital cameras, and peripherals.

Of the featured women in the Nikkei WOMAN article, the lady who had the heaviest bag at 5.7kg is a 29-year old PR staff at an apparel company. She has a tablet PC for work, business smartphone (provided by the office), personal smartphone, portable music player, chargers, and a digital camera, just to name the digital stuff she has.

"I think my bag is too heavy, too, but the digital tools I need for work cannot be spared," she says.

Conservation or Saving Means a Packed Lunch Box and a 500cc Thermos
A 27-year old system engineer says she takes a packed lunch and a thermos full of tea to the office every day.

"I am very conscious about saving money in my daily life and spend what I save on my hobbies like going to a live performance by my favourite artist," she comments.

There were other women with packed lunches, some of whom would bring only white rice and buy side dishes.

Memories of 3.11 Die Hard - Preparing for the Worst
There is an obvious increase in the number of women who carry chargers, bottled waqter, chocolate, candy, LED lights, and a disaster relief map and some other disaster response items since the Great East Japan Earthquake of 3.11 2011.

In the questionnaire, it became evident that 30% of women carry some kind of disaster response item in their bags every day, clearly indicating that even after two years, the memories of 3.11 die hard.

### Carpediemjapan Comments and Observations ###

According to the 3rd and 2011 Edition of the Brand Databank research report on what brand bags women own,
Women aged 25 to 29 own the following:
1. Coach
2. Louis Vuitton
3. Gucci
4. Porter
5. Samantha Thavasa
6. Chanel
7. Hermes
8. Prada
9. Anna Sui
10. Marc Jacobs

Women aged 30 to 34 own the following:
1. Coach
2. Louis Vuitton
3. Gucci
4. Prada
5. Porter
6. Le Sport Sac
7. Hermes
8. Chanel
9. Samantha Thavasa
10. Kate Spade

But when it comes to actual bags they commute with, the attributes they want seem very practical - "big enough to hold an A4 file," "has studs on the bottom so the bag does not get dirty when placed on the floor,""is light weight," and "has many pockets."

After years of insisting on real leather and gold color metal parts, I am beginning to see the benefits of coated canvas as my digital portfolio grows, too.


Fresh Seafood Direct From Japan to HK - Chilled and Frozen Shipments in 1 to 2 Days

Japanese airline ANA and private courier Yamato have tag-teamed to realize 1 to 2-day delivery of frozen premium seafood from Japan to Hong Kong, Singapore and other nearby destinations.

Teaming up with Japan's largest e-commerce shopping portal, Rakuten, ANA and Yamato made their first deliveries in time for Chinese New Year. Retailers in Hokkaido and Kyushu advertised special holiday packages on Rakuten.

"We had not expected to receive so many orders," said Managing Director Hiroshi Ogasawara of Yamato Ogasawara Shoten of Hokkaido, who participated in this first campaign. His store offered crab and other seafood sets, and received four times the anticipated number of orders - a total of 80 , from Hong Kong. The abverage basket size was 15,000 yen, which is five times the average of purchases made in the airport souvenir shop the business manages at Hokkaido's Chitose Airport.

The crab was collected by Yamato and first collated at Rakuten's logistics facility in Shinagawa, Tokyo. This was then shipped via air from Haneda Airport on a late night flight operated by ANA to Naha, Okinawa, where the cargo was transferred to an international flight to Hong Kong. Once in Hong Kong, Yamato made the last mile delivery.

In this instance, it took two days from collection to deliver, but Yamato claims that a minimum delivery time of next day is physically possible.

Rakuten commenced international e-commerce services in 2008, and now has approximately 7,000 merchants active on the site. However, due to the shipping restrictions, the goods sold have been predominantly apparel and accessories.

"High quality Japanese food is in demand from Asian consumers; but chilled shipping was a bottle neck." The latest test has proven that "there is much potential in reaching out and expanding the business in Asia," says Katsuhiko Hiwatashi, Director in charge of Overseas Sales at Rakuten.

A second test has commenced from 18 March.

ANA and Yamato's collaboration does not stop at supporting Rakuten's new strategy. In November 2012, ANA and Rakuten established a framework to realize a minimum lead time of "next day delivery" to Hong Kong, Shanghai, Taiwan, Singapore, and Malaysia. The last mile in all the destinations will be handled by Yamato's own delivery network.

Shipments can be collected from Kanto (Tokyo and its vicinity) as well as Kansai (Osaka, Kobe, Kyoto and their vicinity) areas. The initial service will commence with documents, and gradually expand to ordinary small packets and even refrigerated shipments during the current fiscal year.

This service was made possible because Naha, Okinawa now enables 24-hour customs clearance and has no restrictions on late night flights, and is conveniently only four hours away from the major Asian cities. At Narita in Tokyo, where there are restrictions on custom clearance and flight operations hours, the shortest delivery lead times are three days.

In addition to the test with Rakuten, Yamato worked with Yahoo! in Hong Kong to promote the sales of apples from Nagano Prefecture in mid-January. 200 boxes sold out in one day - solid proof that there is indeed strong demand for fresh produce from Japan. Fresh apples are available at Japanese department stores in Hong Kkong as well, but "consumers were moved by the notion of having them delivered straight from the farms," says Yamato's Global Business Promotions Division.

Japan Post has teamed up with flag carrier Japan Airlines (JAL) to commence test shipments of chilled goods to Taiwan and Singapore in April 2013 as well. A chilled re-usable case has been jointly developed for this purpose. JAL will carry the cases and the destination post offices - Singapore Post and Hongkong Post - will handle the last mile delivery. The re-usable cases are large enough to hold a medium size Yu Pack parcel box and is capable of maintaining the inner temperature at 2 to 10 degrees for up to approximately 80 hours. "If the destination was not in tropical Asia, the temperature can be maintained much longer," says Japan Post.

The test will initially be restricted to shippers sending goods from the areas covered by Hokkaido's Chitose Post Office and Kawasaki's Kawasakiko (Kawasaki Bay) Post Office, but will gradually be expanded. Goods collected by the Kawasakiko Post Office may be delivered on the following day, but those originating from other locations will be delivered in two days from collection.

In 2012, another private courier, Nittsu, has won a contract by the Ministry of Economy, Trade, and Industry (METI) to assist in the post-earthquake recovery of the Tohoku region by promoting produce via e-commerce. Nittsu has created a designated e-commerce site on Yahoo! posting products by 64 businesses including Japanese beef, Inaniwa noodles, and necklaces made of Nanbu steel. 70% of the approximately 6,800 items they shipped have been sold in Taiwan through February 2013, either online or at stalls Nittsu have established at events and at popular shopping areas.

Nittsu says at first, they struggled as the number of products available were limited as well, but such efforts as the stalls and Nittsu staff appearing on local news programs have helped raise awareness and realized quick sales growth.

"Just carrying the goods over here alone is not enough. It is key to do the promotions as part of the package," says Nittsu's Global Logistics Solutions Division General Manager Haruya Tajima.

The METI program comes to an end at the end of this month, but Nittsu plans to launch a new service in its place from April by drawing on its established know-how. Nittsu will open a new site to promote the goods and hold business events where sellers can sit down with Taiwanese retailers. Japanese businesses who are interested in participating need only to hand over their goods to Nittsu and pay a nominal fee of several thousands of yen per month.

SG Holdings, owner of Yamato's rival courier service, Sagawa Express, has takkyubin (small packet express delivery) services operations in Shanghai, Guangzhao, and Vietnam. The Chinese operations is through a joint venture and the Vietnamese business is a subsidiary. There are no significant next-day or chilled shipment services announced as yet, but while other major couriers only deliver to major cities in Vietnam, Sagawa's strength is that it covers the outskirts of Hanoi and Ho Chi Ming with approximately 100 delivery trucks.

### CarpediemJapan Comments and Observations ###
While refrigerated small parcels delivery may sound novel and worthy of hefty surcharges in other markets, Yamato has made it a cost of doing business in parcels delivery here in Japan and it is now offered by Japan Post as well as Sagawa at very reasonable prices.

With Yamato, refrigerated shipping is available for four sizes and surcharges of 210 yen to 610 yen per item apply.

Japan Post has a two-tiered pricing structure based on whether the shipment needs to be merely refrigerated or frozen, and classified by total weight of shipment, not size:

Light blue (top row) is for refrigerated
Gray (bottom row) is for frozen
Once again, the surcharge is from 180 yen (frozen goods up to 4kg) to 640 yen (frozen or refrigerated goods up to 21kg or 30kg respectively).

The service has definitely squeezed out the florist network service that enabled consumers to place orders with their local florist to have a network member local florist at destination to deliver fresh flowers as florists throughout Japan can sell via e-commerce to consumers anywhere for delivery direct via refrigerated shipments.

For my family, ordering ice cream cake made of fresh milk by a specialist near a dairy farm for birthdays have become a norm, as well as receiving crab and other fresh seafood from family in Hokkaido and friends in Hiroshima (famous for oysters).

Yamato initially developed the "direct from farms and ports" services as a way to help boost the local economies of farming and fishing communities that were losing its workforce to major cities due to lack of work. In some areas it has become so successful, people have migrated back to their hometowns.

The Japanese are known to pay for convenience and to be spoiled for it. Now that Japanese businesses are reaching out to our Asian neighbors to spoil them in the same way, how will the local businesses respond?

See also: Cheaper, More TLC, and Same Speed - Yamato's Edge over DHL and Other Couriers

Nikkei MJ 22 March 2013 Cover Story,
Rakuten Promotion Site:
Rakuten: Discover Gourmet Japan! Premium Seafood Shipped Directly to Hong Kong - Shopping Japanese products from Japan