And in the last couple of days, I have had the privilege of going through a couple of very interesting announcements by Japan's No.1 home delivery courier service company (with 42.2% market share), Yamato, and their largest customers, Rakuten and Seven Eleven.
Rakuten is Japan's No.1 online shopping portal with an annual turnover of US$4,7 billion. They do some 400,000 transactions a day for their merchants and own a baseball team as well as many portals around the globe including Buy.com and PriceMinister.com.
They have had global aspirations and for some time now, their internal meetings have all been conducted in English so that headquarters staff may develop a more international mind set. (There are jokes that say that the most commonly used expression at Rakuten meetings is "this part is really important so I am going to use Japanese.")
At one point a couple of years ago, I met with a Rakuten Director who oversees their logistics and he indicated that only about 2% of their total transactions generate overseas shipments, but they plan to change that significantly with their expanding global footprint.
But back home in Japan, and in its capital, Tokyo, they announced that they will start doing their own home delivery of fresh produce purchased on Rakuten Mart, the online supermarket.
Instead of teaming up with Yamato, who currently handles the shipments, they have opted to team up with local delivery agents who will wear Rakuten uniforms and caps, and may even repaint their vans.
|Yamato Transport Logo|
In their announcement, Rakuten indicates that increased brand exposure is a key aim for them, which explains why the beige and green Yamato trucks with the black cats on them won't do.
|from Seven Eleven Japan's web site, revenue trends|
They have been offering home delivery of lunch boxes etc. at a delivery charge of 200 yen for purchases over 1,000 yen. Starting from 7 May 2012, they have changed that to free delivery for purchases over 500 yen. And for purchases under 500 yen, a 120 yen delivery charge applies.
The 200 yen deliveries were done by Yamato. The new service has their shop managers or staff delivering the goods.
The aim here is for the shop staff to develop a more sticky relationship with the customers so that they may be able to make recommendations and cross-sell other goods.
This aim reminds me of the old days when the local liquor store owner came around every week on a designated day to ask if there was anything we needed. He would deliver anything from kerosene for the heaters to rice, cases of beer and/or juices, bread, sugar, and salt.
Today, the only people who come to my home regularly are the local book store owner's son, who delivers the magazines I "subscribe to" through his shop; the dry cleaner who comes to collect my dirty washing and delivers them the following week; and the consumers' co-op home delivery service van with whom I place orders on or before 13:00 of every Monday to receive delivery just after noon on Saturdays.
Because in Japan, most of us use public transport during our commutes and for shopping, it is not uncommon for supermarkets and bookstores to offer home delivery. I was pleasantly surprised once when I purchased about 3kg of books with Kinokuniya Book Store in Tokyo because they offered to deliver the books to my home for free without my even inquiring about them. When I took my mother to look at flamenco costumes at Chacott, they were more than happy to send her newly acquired dress, tights, and accessories to her home while shipping the cosmetics and bag to my home - two different locations, and for free of charge, too.
Come to think of it, it is a wonderful way of capturing my residential details in their system. All they have to do is have me fill out a form allowing me to opt out of DMs with a disclaimer about their personal information policy. It may cost them from US$3.00 to US$900 a piece, but they have my details and a quality address.
This reminds me now of how a Marketing Director at UPS once bragged that they have an extensive database of who is shipping what to where how frequently and that information is worth more than the value of the goods they actually carry.
Perhaps that is something that Seven Eleven really wants to get a hold of. Unlike Rakuten, where their system will capture the personal details of a customer, retailers selling FMCG (fast moving consumer goods) have traditionally struggled to better understand and communicate with their clientele through profiling.
One of the biggest sellers of music and video rental giant Tsutaya and parent company CCC is that through the T card, they have shopping profiles on more than 2/3 of Japan's adult population and they can help willing buyers of that information with targeted in-store marketing as well as online. And Tsutaya owns rival convenience store chain Family Mart.
Rakuten's move is actually in line with off line marketing attempts in recent years by online firms. Top fashion portal ZOZO TOWN published a magazine and runs TV ads. TV Shopping giant Jupiter has started opening pop up stores in Department Stores.
Rakuten no doubt gets much exposure with their baseball team, but they are wanting more.
Yamato has not been resting on its laurels but have been aggressively pursuing ways to future proof itself as they realize that their dominance in the domestic market that enables them to operate with no debts cannot last forever. And their 4 June announcement to launch next day courier services to key Asian destinations is a tip of the iceberg.
Still, it is probably a very bitter pill to swallow to one day be told that your biggest customers are competing with you.
Maybe this is a reaction to the concentration of delivery services in Japan, and one day not too far in the future, Rakuten will sell their logistics services arm to someone like UPS as part of a re-concentration movement.
Or, maybe this is the new reality where logistics services capacity will be sold like cloud computing services by the very people who look after their own distribution to ensure control over quality and costs.
Maybe people like Rakuten and Seven Eleven will eventually start using "hybrid" services whereby they use the likes of Posts and Yamato for the last mile again, taking advantage of their ability to consolidate shipments and negotiate large discounts.