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6.22.2017

Amazon Japan Enlisting 10,000 Private Couriers in Tokyo for Own Delivery Network

The Nikkei published on 22 June 2017 that it has learned that amazon Japan has enlisted 10,000 private couriers to create its own delivery network in response to Yamato's pulling away from amazon business. 

According to the Nikkei report, amazon Japan is aiming to secure 10,000 private couriers in the Tokyo Metropolitan area alone by 2020. Their focus is on private couriers who specialize in same day deliveries. This is in response to No.1 private courier Yamato Transport Co., Ltd. pulling out of the service, leaving amazon to switch to Plan B. This move by amazon is anticipated to be welcomed by the private couriers that are used to absorb overflow by such major players as Yamato and rival Sagawa during peak times, as it would boost their overall volumes and hopefully, provide steady work throughout the year. 

The Nikkei estimates that amazon ships approximately 300 million parcels per year. This is the equivalent to just under 10% of overall domestic small parcels delivery volumes in Japan. If amazon starts to spread more volume to small and medium sized couriers, this would help towards leveling the playing field for e-commerce deliveries, which, to date, is a stronghold for the big three: Yamato, Sagawa, and Japan Post. 
In Tokyo, by far the largest destination, Maruwa Unyu Kikan Co., Ltd.,  a delivery company offering "Momotaro Bin" services predominantly for online supermarkets and is listed on the 1st Section of the Tokyo Stock Exchange, has brought together private couriers. Maruwa has already commenced services within the 23 wards as the contracted delivery agent for same day deliveries for amazon.
Maruwa's objective is to keep a close eye on the working hours of the drivers while guaranteeing a steady volume and thus income for them. Maruwa plans to offer dormitories, fuel subsidies, as well as training. Where necessary, Maruwa is also prepared to lease light-weight vehicles that are easier to maneuver through the central business district to encourage newcomers into the business. 
Maruwa has already prepared several hundreds of light-weight vehicles for the job. The plan is to expand to 1,000 vehicles within this year and to secure 1,000 and more drivers. By 2020, the objective is to expand to 10,000 vehicles and 10,000 drivers so that same day delivery service can be realized in the major neighboring cities to Tokyo. Depots will be added to its network and the overall investment is estimated to exceed 10 billion yen, funded by Maruwa's own money. 
According to the Ministry of Health, Labour, and Welfare, in 2016, there were 2.01 job openings for every driver for delivery service drivers including truck drivers. This is much higher than the national average of 1.25 jobs per applicant, clearly indicating that it is a seller's market lacking resources. The reason is that the job is tough while the pay is light. 
Delivery services by light-weight vehicle requires owners to register their vehicle with the Ministry of Land, Infrastructure, Transport, and Tourism, and the business can be launched with just one vehicle. As at March 2016, the number of such registered businesses was 154,842. Many couriers are contractors to the large and medium sized delivery companies, but their business tends to rely on peak periods with very limited volumes in between. 
Amazon has its own warehouse and delivery hubs in more than ten locations throughout Japan. They have been offering same day delivery to mostly the urban areas excluding the most remote islands. Such deliveries have been handled by Yamato and japan Post, but Yamato has begun to cut back on same day delivery services with an eye on pulling out of the service all together. Yamato has already been forced to cut back its service offering by removing the 12:00 pm to 2:00 pm delivery time slot due to rising costs and overtime work, and in the need for higher efficiency. 
Many e-commerce businesses are heavily dependent on Yamato, and as a result, they, too, are having to reduce their time certain delivery options. Online stationery and office supplies seller, ASKUL Corporation (whose name ASKUL means "delivered tomorrow") has revised its time certain delivery options on 20 June to align with those of Yamato. The same has been observed for major fashion retailer ZOZOTOWN, operated by Starttoday Co., Ltd. 
In response to inquiries by the Nikkei, ASKUL has revealed that they plan to enhance its delivery services for its SOHO and consumer business. 
Japan's largest online marketplace, Rakuten, has also announced plans to establish its own delivery service while in response to the Yamato shock, in April, Rakuten ran a campaign to offer 3x more loyalty points (1 point = 1 yen) to customers who successfully receive their purchases on the first delivery attempt. 
Japan Post is also running a campaign from April through September whereby consumers can earn Ponta points (convenience store chain Lawson's in-store loyalty program) and other benefits if they opt to receive their parcels at post offices or via parcel lockers. 

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