The name, us-style.com, hints at the focus: e-commerce with an American twist. The use of “US” suggests that the target audience considers place of origin important.
Once you see the logo — the simplistically drawn, kawaii pup (a lot like Kurayon Shinchan’s sidekick) perched atop the shopping cart — you know the market is Japan. It’s a smart play.
Much of the news here focuses on the troubles with life online: low penetration ratios (by some standards), high connection charges or difficulties in devising payment systems. Often overlooked is the fact that Japan is the world’s second-largest online retail market. Fourteen million people are already online and that crowd will be about three times bigger by 2001.
They spend about $1 billion a year; MITI figures revenues will hit 3.2 trillion yen in 2003, with each consumer plunking down about 60,000 yen annually. If that sounds overoptimistic, Japan’s online sales grew 140 percent last year.
Some analysts believe that e-commerce is the holy grail for foreign merchandisers in Japan, since it will allow them to bypass the cumbersome distribution system that frequently locks them out of the market. The argument has lost some of its force given the recent success of foreign companies here — the Gap, Eddie Bauer, Tower Records, Toys R Us. By most accounts, the wall is cracking.
But companies that can’t afford the investment in time and money should be looking to the Net. U.S. online retailers with Japanese sales report say that 18 percent of their total sales come from Japan. More than half the $1 billion that Japanese spend online goes to American sites. According to IDG, the IT consultancy, it’s an Asia-wide phenomena: Online shoppers throughout the region buy an increasing number of goods from overseas sites, even though local Web sites still outsell them by about two to one.
Diverting some of that money into a Net-repreneur’s pocket is a bit harder than it seems. First, there are different consumer needs. Japan uses the metric system and that is more than packaging and labeling. Next time you open a refrigerator door, note how snugly those fruit juice containers fit in; U.S. sizes won’t. (Irrelevant, you say? Not if you’re a grocer, one of the hot new online businesses.) Product descriptions have to be meaningful. For example, an olive oil that “is like a Tuscan breeze” probably isn’t going to have the appeal in Saitama that it does in Soho. And don’t forget the gift-giving season. Why should Tokyo hotels have a monopoly on soup and fruit juice sets? A little repackaging and a U.S. retailer is ready for the regular o-seibo and o-chugen booms.
That’s how Maxwell Thomas thinks. Thomas is founding president and CEO of us-style.com — and one of only four gaijin in the company’s 20-person Norwalk, Conn. headquarters.
Given the company’s focus, that balance makes sense. Its Web page is a portal or mini-mall for companies that want to do business in Japan, but don’t have the expertise to do it right. Instead, they can turn to Thomas.
His company provides “a turn-key solution” to translating U.S.-based sites: They build, host and maintain a Japanese version of the American home page.
In addition, us-style.com offers merchandising, promotions, “tarento” endorsements and a customer service system that smooths communications between U.S.-based companies and consumers that frequently don’t speak the same language. (They translate inquiries, forward them to the company and then translate the response.)
“It’s a soup-to-nuts experience,” said Thomas in an interview last month. “We provide access to the product in Japanese for the consumer here, but our real value-added is providing access to the producer.”
Turning to third parties to handle e-commerce is increasingly popular. The virtual and real markets are vastly different. A company may know how to handle brick-and-mortar sales, but cyberspace requires a new mind-set. That is one of the reasons why Levi’s decided earlier this month to abandon its online venture and leave those sales to retailers. “World-class e-commerce is just unaffordable for us right now,” explained a company spokesman.
That opens the way for ventures like us-style.com. So far, nine companies — including barnesandnoble.com, CDNow and Outpost.com — have become ePartners and other deals are in the works. Together, they offer around 5,000 products. Thomas says the optimal size for the site is 10,000 vendors and a million products.
That seems awfully optimistic, given the much ballyhooed reluctance of the Japanese to actually spend yen online. That is what drove Softbank into 7-Eleven’s arms and their deal to combine cybershopping with the neighborhood conbini.
Thomas thinks the learning curve will take care of that. U.S. consumers were equally squeamish when e-retailers opened their doors, but they outgrew those fears. “The Japanese’ll come around in time,” he said.
Still, Thomas acknowledges that e-commerce in Japan will be a distinctly Japanese experience. “Japan will have a different Net from the States. It’ll be huge, but it will have a different angle. Most likely it will not be PC-based.”
Japanese surfers are fighting connection charges. They want the meat (or wine, or clothes or whatever) and couldn’t care less about the fluff. Three clicks and they’re gone.
“Forget the content stuff,” says Thomas. “It’s all about product. In Japan, it is just too expensive to browse online.”
There is an unseen dimension to product, though. Merchandising and marketing are key, but if the shopping experience is going to be as simple as possible you have to have the technology. That is why big e-commerce ventures can spend as much as half their capital on technology. That is why Amazon.com has filed suit to protect its “one-click” commerce system — it is trying to lock in its competitive advantage.
Thomas has taken that lesson to heart: The us-style.com package is proprietary. Repackage your goodies and translate your home page, but “without the technology, you can’t have the marketing or the consumer experience,” said Thomas.
And the dog? “He’s the guide,” said Thomas.