Disintermediating Death

Back to Contents of Issue: November 2000

Funerals in Japan are cumbersome and outrageously expensive. Net startup Polytech intends to make them less so.

by Chiaki Kitada

funeralA LOVED ONE DYING is never easy on friends and family, and the cost of funerals is always a major burden. But in Japan a funeral is particularly costly, in terms of both time and money, not only for families of the deceased, but also for friends and business associates, who are expected to contribute condolence money and attend the ceremony. Is it appropriate to even consider using the Web to disintermediate things in this arena? You wouldn't think so, but a startup called Polytech is giving it a shot -- and thinks it may be on to something.

A two-year-old venture headquartered in Shizuoka, Polytech has developed a system called e-sougi (sougi means "funeral service") through which mourners can call up a customized Web site and participate in a funeral from any distance. Virtual attendees type in the name of the deceased, whose photo and biography show up onscreen, and "sign" the guest book. Those planning to attend the funeral can use the site to find flower and clothing rental shops, hotel or transportation companies, and directions to the event. The family, meanwhile, can avoid petty logistical hassles during a time reserved for grieving.

Of course, this is the pitch to be made to Polytech's indirect customers -- ordinary people. The real target for Polytech is the funeral home.

The startup's service is designed in such a way that the funeral companies can easily create customized sites for each funeral. Realizing that most funeral homes in Japan are not tech savvy, Polytech provides the complete package -- the hardware (including computers and scanners), the software, maintenance, and payment processing (including credit card clearance). The minimum upfront price for the complete package is ¥1.4 million. (Software can be bought separately, but because Polytech offers maintenance it urges clients to buy the whole package.) In addition, a funeral company pays an uploading fee for each new Web site.

E-sougi also provides optional services for those who physically attend the funeral. Instead of drawing your name gracefully with a brush dipped in black ink on soft Japanese paper, for example, you can use a special pen and LCD panel for signing the guest book. What's the point? All the names, phone numbers, and addresses signed on the book at the funeral can be seamlessly integrated with those entered online by those who attended the funeral virtually.

Sales manager Seiji Shima emphasizes the importance of the name list -- in Japan, when a family receives money for ceremonial occasions from friends, relatives, and associates, it has to return the favor by sending thank-you gifts. Usually the gifts range in price from a quarter to half of the money received. They must be sent within 49 days after the death, by the end of mourning period. This creates a sizable market for gift shops and department stores.

"Funeral companies want to increase their share in the return-gift market by providing the list swiftly to their customers who might otherwise go to a department store," says Shima.

It sounds like a promising niche market, but some question whether funeral homes have enough incentive to offer Web-based services. Shinichiro Sato, an analyst of Monex, wonders how funeral companies would maintain their (some would say obscenely) high profits with the new system. Takeshi Hosoya, analyst of Jupiter Communications, has similar concerns about incentive for the funeral homes. "It's not as if they need any advertising. Customers knock on their door by words of mouth."

Shima remains optimistic, however, noting that Japan's population is aging and that therefore the funeral market will expand over the next 30 years. He estimates that the number of funerals per year could grow from 930,000 last year to nearly 1.4 million in 2010.

"The market potential looks promising due to the increasing number of deaths in this rapidly aging society," agrees Monex's Sato. "Funeral companies will start looking for more diversified approaches to their services. But it will take time."

There are no official statistics on Japan's funeral market, but Polytech estimates that the total amount spent for funerals in 1999 was roughly ¥2.3 trillion, including condolence money, gifts to Buddhist priests, entertainment (foods and drinks), flowers, telegrams, et cetera.

Shima says e-sougi will succeed because both the funeral companies and the end-users will benefit from using it. Funeral companies can earn money and gain customers by opening a Web site and receiving orders for things like flowers, messages, and gifts -- and earning a percentage of each sale. Funeral attendants benefit from a broadened choice of services and prices and one-stop shopping.

Do Japanese consumers care about price when it comes to funerals? There's evidence they do. "People have already started choosing less expensive public facilities and services over funeral companies," Sato says. And a site called Funeral Plaza, hosted by a gift company, gives a detailed price breakdown of funeral companies in the Tokyo area -- and gets 40,000 hits monthly. "Funerals take place so suddenly and are so emotionally taxing, that you tend to leave everything up to funeral companies," says Jupiter's Hosoya. "But later you start wondering why it cost so much."

Koekisha, one of the major funeral service companies, will soon open a site that lists price estimates for its services, saying it's offering the service because people have limited means of figuring out funeral prices in Japan. Another reason might be to deflect attention from new price-comparison services.

So will e-sougi survive? Ultimately, of course, it will be the consumers who decide. "I wonder how widely this kind of service will be accepted by ordinary people," Sato muses. "Things like writing your name in a funeral book are the last front to be digitized."


This is an interesting Net startup, with activities ranging far beyond the funeral market. Here are some of its other offerings:

Kind of like e-sougi, but for a more cheerful event. Custom sites offer message and present delivery and a digitized book-signing service for attendees (see main article).

Lets users read email in their mother language no matter where they are and what kind of computer they're using. How? By turning the letters of a message into images. Free service. www.inkfont.com

Cyber Square
A package that lets companies offer their customers online photos. Works on i-mode, too. Example: a pet hotel can let owners see a current photo of their pooch while they're vacationing in Okinawa.

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