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."
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."
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