Retail Potential of Japan Not to Be Underestimated

Back to Contents of Issue: December 1999

by Rolf Boone

Thirty-five million page views of Yahoo! Japan per day, an equally staggering seven million daily visits to the Nikkei Index, and Merrill Lynch is calling the Japanese Internet market the "next big thing." Who said the Japanese were to be tripped-up by their own inflexibility toward Internet connection rates, credit card use, and security issues surrounding personal data and so forth? Phooey. Forget it.

As it is now, the idea of the successful Internet startup that has conquered North America and moved on to plunder foreign shores can at times resemble the overly florid prose of mythology. Hello. Reality bites. It is online statistics like the above that has made it more real than ever.

Maxwell Thomas, CEO and co-founder of US-style.com, an online mall, or "super site," targeting the Japanese marketplace for American-made products -- and very much aware of the exciting statistics - sees things changing faster than the conventional wisdom on Japan would lead us to believe.

"People tend to feel that Japan is two years behind the States," said Thomas, whose US-style.com site was established in May 1999 and works with several e-partners, including Barnes & Noble, CD Universe, Omaha Steaks, Dean & Deluca, and Big Entertainment. "There are hindrances to the explosion of the Internet, such as the cost of accessing the Net and the payment and familiarity that they have with the Net, and the security issues, but all of those are either coming down or being addressed -- some by competitive forces, some with consumer behavior changes. Japan has all the makings of being the world's next big Internet boom."

Along with online competitors Bargain America and AccessAmerica -- although Thomas is quick to point out that they are the largest in terms of a "mall" and merchandising -- US-style.com offers its partners (seven at the moment, several in the works) the creation of their site in Japanese, as well as a Japanese database of products, merchandising, Japanese customer service, fulfillment issues, like which carrier to use, and then promotion through the website itself.

"They [in talks with 50 U.S. sites] all want to be part of Japan, but they want to do it if there's an easy way, and that's our whole goal: we want to offer them a turnkey way to get there," adds Thomas. American companies have warmed to the approach, but on the receiving end as well, as many Japanese -- so Thomas feels -- have taken to the software that is in place to help them overcome initial fears about Internet security.

"We have one of the most advanced shopping carts on the Japanese Web right now. We actually have a piece called smart address,' where they enter their zip code, and it pulls up their address. It makes it intriguing because it doesn't use cookies, it's all database driven. One [goal] is to make it as easy and friendly as possible, but the second is that we want to avoid the cookie model because people are afraid of them, for whatever reason."

"I think these things will be overcome in time, but we've tried to address them as much as we can now, " said Thomas.

Also encouraging are the demographics, which show that among those coming to and using the Internet in Japan in increasing numbers is that largely underreported group of online enthusiasts known as women. US-style.com figures report an even split between men and women and show that all users are predominantly in their twenties or thirties.

"I'm glad to see more women at home using the Web. I know women tend to be the big drivers in online shopping and in terms of traditional goods. The Japanese female consumer has historically been one of the most sophisticated and largest group of shoppers in the world, and seeing that move to the online arena would be a great boom to online retail in Japan."

US-style.com originally launched on Yahoo! Japan (of course) over the summer, debuted on AOL Japan on October 1, and is to appear on Asahi.com as well. What happens next is no longer "anybody's" guess. The writing is on the wall.

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