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5.10.2013

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)."


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Reference: Nikkei Marketing Journal cover story for 10 May 2013

5.09.2013

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.

5.02.2013

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%

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