A New Wealth - Celebrating the Mundane with "Unseen" Luxury

$100 for a box of tissues... $300 for a coat hanger... $30 for an ear cleaner... $100 for eight rolls of toilet paper. These are among the best selling luxury items in Japan today, many of which are doubling sales over the previous year. Combine the words "luxury" "daily items" and "gifts" at Rakuten or Yahoo, and the list includes $70 packages of 20 disposable masks (a must-have during winter and pollen allergy season), $90 plastic umbrellas, and $10 tooth brushes as well. 
"Hanebisho" toilet paper, by Mochizuki, and its fans say "you only need to try one roll to understand the difference." Launched in 2007, the luxury toilet paper is made of the finest materials and treated in the clearest of waters. The company spends five to ten times the average time to dry the paper, conducts rigorous testing, and only 30% of what is produced makes it as final products. In the first five years, such extravagance appealed to only a handful few, but once the product began to appear on TV shows as "the ultimate toilet paper," sales began to take off, and 2014 sales doubled that of 2013, according to Mochizuki. 
Daishowa Shiko's "Juni-Hitoe" tissues, $100 a box, is another such item. The 4-ply tissues are made of much thinner paper than your standard "soft tissues," and the vivid twelve-colour selection is in accordance with its name, which is actually the traditional costume of Heian Era princesses and the ladies of the court whereby women layered 12 garments to create one outfit. The boxes are also scented with traditional incense, gift wrapped accordingly (as per the image above). Launched in 2014, the company has sold approximately 1,000 of the goods in the first year. 
Women are not the only big spenders on luxury daily goods. Luxury wooden coat hangers maker Nakata Hanger has a loyal following of men. 
Priced at $15 to $300 a piece, Nakata initially sold hangers to boutiques and fashion companies. But started selling directly to consumers from its showroom eight years ago. In 2014, showroom sales grew 20% over the previous year and 50% online. The majority of Nakata's clientele are men. 
In an interview with the Nikkei Marketing Journal, a 28-year old man said, "I like to buy it as a reward for myself when work goes well." He spends around $5,000 a year on clothes and is now the proud owner of seven Nakata hangers. He says that when his clothes are hung on good hangers, "my favourite clothes look good and I love the feel of wood. Even when I am not wearing my clothes, seeing them hanging in good form makes me happy."
In Japan, we have always had the element of "dressing up the unseen sides of kimonos" in our genes. The "haura" or the lining of the kimono coat is a key element when creating and dressing in kimono for men. 
Women also took care in choosing the motifs and colours of the lining of kimono as well. It is not just about what you show, but what is there; and taking care of the unseen with such care. Once upon a time ago everything made in Japan and Japanese master craftsmen were about such details. We seem to have lost a lot of that in the name of economic competition and "development." While we have been surpassed by China as the world's second largest economy, we may finally have begun to enter a new phase of "wealth" - a society where people are not feeling guilty to indulge on the unseen for themselves in their daily lives; and not just saving the best silver for special occasions, but rather, we are celebrating our daily lives in small ways. And of course, it is only elegant if one does not brag that one wipes one's behind with $100 toilet paper!


Same Day Delivery Now Cost of Doing Online Business in Japan

Japan is a small country - only 1/25 the land mass of the US of which only 28% is arable, which results in a high concentration of population that creates mega metropolises like Tokyo and Osaka, so even B2C delivery is not as geographically challenging as in the US, but that only means that consumers are willing to pay less - or nothing for same day delivery. And if one cannot offer it, then you may not even make it on the playing field here.

 It has been a while since amazon.co.jp offered same day delivery of goods in their warehouse where we could order by 11 am and receive the items at 17:00 the same day. To realize this, they have built their own warehouse network throughout Japan, and hold Sagawa and Japan Post to contracts that guarantee delivery times.

Image from NHK broadcast on 19 February 2013

Stationery specialists Askul is thus named because the goods come "kuru" tomorrow "asu." Askul's consumer services site (Askul is for businesses) LOHACO, a jointly operated business with Yahoo Japan, has commenced same day delivery as well, and now enjoys three peaks in the course of the day for transactions - once during the traditional online retailer peak of late evening; once between 7 am and 10 am - deadline for same day delivery; and early evening when commuters shop on trains via smartphones. 55% of their customer base is women, many who work full or part time. This is unusual as most "general store" type malls have a higher ratio of male clientele. They now enjoy a turnover of 1 billion yen a month (just under USD 10 million).

Yodobashi Camera (who actually sells a lot more than cameras these days) offers free delivery, but if one is willing to pay a premium, delivery as fast as three hours from time of order is possible so if your PC or phone or TV happens to break down, you won't be without them for long. Some people have ordered suit cases because they needed it for a trip the following day. The three-hour service is realized through the hiring of a chartered truck, but their ordinary deliveries are controlled by in-house specialists who monitor the weather and traffic conditions and plan to ensure peak performance at peak times.

Online fashion mall, ZOZO TOWN, who does not charge for delivery, is aiming to offer same day delivery for 40% to 50% of their goods by end of 2014. 

They found that 80% of their customers choose the earliest delivery slot when given a choice, so it was a logically derived conclusion that most customers want same day delivery - free of charge, of course. 

Size of selection and price are still powerful drivers that bring traffic to e-commerce sites, but such elements are becoming less and less effective to realize differentiation. 

Unlike some other markets, where faster delivery can fetch a premium or additional fees from consumers, in Japan, where convenience is a powerful currency, same day delivery is becoming a cost of doing business in the big league.


Japan is Becoming "the Land of the Free" Again

I am not talking about the freedom of speech or the freedom to meet... but that businesses are turning to the one tactic that helped spread mobile phone ownership lightning fast - FREE MOBILE PHONES - to other business areas now.

Namely, Yahoo has announced that merchants will no longer need to pay to sell on Yahoo! Shopping and Yahoo! Auctions.

There is a lot of controversy around this since it was announced:

On the one hand, advocates believe this will give Yahoo! a badly needed boost to catch up with front runners Rakuten and Amazon.co.jp

Antagonists are convinced that this will fill up the space with lots of crappy merchants and chase good business away to the very people Yahoo! hopes to conquer; the theory that bad gold will chase away good gold.

The verdict is still out, but Yahoo is busily promoting away. 

Another interesting FREE campaign is cable service provider J:com's 100,000 free tablets giveaway campaign. 

They seem to have teamed up with Huaway for the free 100,000 units. (Users can choose SONY as well, but that won't be for free.)

Of course there is a catch, that one must sign a one-year contract, but we are all familiar with these thanks to the mobile phone companies, one of which has a strong tie-up with J:com, au.


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