Shopping for the Nation

Back to Contents of Issue: December 2002

A new online business makes the drive to Costo for you.

by Bruce Rutledge

BRENDON HANNA HAS BEEN making regular pilgrimages to Costco for his growing family since 1999, when the membership warehouse club opened its first store in Japan outside of Fukuoka. "We would spend the better part of a day and nearly JPY10,000 on the round trip to Fukuoka," he recalls of his shopping treks from his home in Nagasaki. "Although I enjoyed visiting, and we probably paid for every trip with savings on our shopping, I wished there was an online service for the times when I just wanted a few items."

Well, now there is. It's called TheFlyingPig.Com, and it's run by Hanna and his business partner, programmer and Kyoto resident Robert Spann. TheFlyingPig.Com has no affiliation with Costco, but it will ship anything on Costco's shelves anywhere in Japan.

"Anyone can do what we're doing ... theoretically," Hanna says. But what prompted him and Spann to go shopping for other people's fresh bagels, 5kg pancake mix packages and decaffeinated instant coffee? In a way, Hanna was already doing the shopping -- he just decided to try to make a business of it.

Hanna moved near Fukuoka and spent the last two years commuting to his job with a video company in Tokyo by plane, working four days in the capital and the other weekday out of home. His trips to Costco became more frequent, yet his shopping list continued to grow. "I'd go out to Makuhari occasionally, and people would ask me to get this or that thing for them from Costco," he says. "Sometimes I would take stuff up with me from Fukuoka, since it was actually easier for me to get to the warehouse there than in Chiba!"

With every trip from Fukuoka to Tokyo carrying someone else's breakfast cereal, Hanna's business plan grew. He talked to Spann about the idea, and they decided that selling Costco groceries and goods online had potential. Thus TheFlyingPig.Com was born; its Web site has been up since October 8.

But with the Foreign Buyers' Club doing well in Kobe (see Bringing Home the Bacon at the Foreign Buyers' Club in our October issue), does Japan need another online grocery catering to foreigners? "TheFlyingPig.Com is looking to stimulate the growth of the Internet-based shopping sector in Japan for groceries, daily necessities and general merchandise," Hanna says, adding that he is a big fan of FBC and wants to emulate it when it comes to winning customers' trust. "In any industry, competition tends to benefit consumers in terms of lower prices and higher quality, as well as benefiting the businesses involved by creating a larger market for goods and services."

Hanna admits that some of the regional supermarkets are stocking more imports on their shelves. "Japanese grocery stores have been doing a much better job," he says. "Sometimes I'm amazed at the things you can find, even in rural stores." Still, he says, Costco fills a need, and right now it only has three stores in Japan -- in Fukuoka, Makuhari, and Machida in western Tokyo. "If you're in Nagoya, it's an eight hour drive to a Costco," Hanna says.

TheFlyingPig.Com charges margins of about 15 percent. Hanna says the key for him was playing on Costco's reasonable prices. "Some resellers mark up things 50 to 100 percent, but then the merit is gone," he says. "We want to be sustainable as quickly as possible on 15 percent margins."

Costco told Hanna that it doesn't plan to build an e-commerce site for several years; instead, building name recognition and trust will come first for the megastore. That gives TheFlyingPig.Com a little wiggle room.

The company is "a permanent work in progress," Hanna says. "I've talked to some of the more Net-savvy people who have seen our site, and they say, 'Man, you have a lot of work to do.' But I've also talked to people who check our site and say, 'You can get bagels for that price? I'm there.'" @

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