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Japan Internet Report No. 46 March 2000
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In this month's issue:
- TKAI adds 1,000 people, ten offices
- Wireless Internet report purchasers speak out
- Japanese e-commerce by the numbers
- Fun facts to know and tell about
i-mode
- Portal deals as ineffective in Japan as in U.S.
- Quote of the month
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TKAI adds 1,000 people, ten offices
TKAI added 1,000 employees and offices in ten more markets across Asia when we signed a definitive agreement last month under which chinadotcom corporation
(http://corp.china.com) acquired a majority interest in our company. We are extremely pleased about this new relationship, which will provide our clients with powerful means to reach even deeper into Japan and beyond to other Asian markets.
Effective March 21, our Tokyo staff will co-locate with The Web Connection, chinadotcom's e-commerce unit here in Tokyo. The West Coast TKAI office will continue to function as-is.
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Wireless Internet report purchasers speak out
Here's a sampling of comments from purchasers of our latest report on Japan's Internet-enabled cellular telephone market:
"...An extremely timely and well-written introduction to this new market."
"...A report of this quality would cost at least ten times as much if one were to ask a big name consulting firm for the same information."
"...The concise and logical presentation, combined with the extensive use of figures and charts, makes it the most practical source of information in this area I've found. And I have seen a lot..."
Some of the companies that have purchased the report can be seen at:
http://www.tkai.com/clients/
When we released this new report last month, we figured that telecoms, handset manufacturers, integrated Internet service providers, and major content companies - in other words, the Big Players - would comprise the majority of the buyers.
We were surprised - and pleased - to see that a substantial number of the purchasers to date are hard-core entrepreneurs and smaller ventures...
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Japanese e-commerce by the numbers
Here are some recent figures that show the vibrancy of Japan's business-to-consumer online sales sector. It's noteworthy that smaller companies grounded in traditional retail are racking up some of the most
impressive successes online.
- Acom (www.acosis.com), a provider of settlement services, claimed December 1999 sales of approximately U.S. $14.3 million through the 820 online merchants who use its system.
- G-COLLECTOR (www.torendo.co.jp), a seller of collectible watches, boasted sales of U.S. $2.3 million in the year through November 1999.
- Internet Gekiyasu Shop (www.joho-yamaguchi.or.jp/co-simok/), a discount retailer of videos, consumer electronics, and golf gear, claims sales of U.S. $2.9 million in the year through January 2000.
- Ippin (www.ippin.com), a retailer of fishing gear and other outdoor specialty items, racked up sales of about U.S. $670,000 in December 1999.
- Rakuten Ichiba (www.rakuten.co.jp), an online shopping mall, claimed December 1999 sales of just under U.S. $10.5 million among its 1,500 merchants.
- Terukuni Electric (www.terukuni.co.jp), a seller of lighting fixtures, says it sold U.S. $860,000 worth of merchandise last year.
But in my view, the company that continues to blow everyone out of the water is Bandai. Bandai is now racking up sales of over U.S. $570,000 per month from a single digital content service (Kyarappa!) available by Internet-enabled cellular telephone. The company has attracted an astounding 600,000 users to this 100 yen per month service. Keep in mind that this is a recurring service, and since the small fee is simply tagged onto the telephone bill each month, Bandai's attrition rate is probably amazingly low...
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Fun facts to know and tell about i-mode
As long as we're on the subject of Internet-capable cellular telephones, here are some fun facts you can amaze your friends with:
- NTT DoCoMo alone now has more than 4.5 million i-mode subscribers. That's about twice as many subscribers as all Internet users in Hong Kong and Singapore combined.
- In a sense, NTT DoCoMo is now Japan's largest ISP. It's substantially ahead of second-place @nifty, which has 3.62 million subscribers.
- i-mode is giving the portals a run for their money, too. The i-mode service generates 40 million page views per day, more than half the number generated by market leader Yahoo! Japan.
- About 80% of all i-mode subscribers have signed up for some sort of fee-based service, and half of these users pay for more than one service, according to NTT DoCoMo.
- Online securities seller DLJ Direct claims to be getting several thousand orders per day via i-mode handsets. The company says that last month, orders placed through i-mode handsets accounted for 14% of all orders.
- NTT DoCoMo has done a brilliant job of creating a closed, proprietary subset of the Internet at large. Hats off to Our Favorite Monopoly!
The following are not facts, but rather my highly-biased observations on i-mode and other Internet-enabled cellular telephone services here in Japan.
- In the fee-for-content sector, the Internet industry primarily sells to itself. For example, the best-selling fee-based newsletter is "Internet Watch," which is all Internet-related news. But with i-mode, for the first time we're seeing consumers paying for non-Internet-related content - surf reports, recipes, fortune-telling, fishing updates, and so forth - rather than just news about the Internet, games used by Internet-crazed youth, etc.
- In Japan, it's time to think about the Internet population not only in terms of home versus workplace users, but in terms of wired versus wireless users. Wireless access eliminates the distinction between home and workplace use.
- Remember "push" media? Well, i-mode is a push media that actually works...
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Portal deals as ineffective in Japan as in U.S.
Portal deals are very poor investments. Based on client experience with the two largest portals in the United States and their Japanese
counterparts, it's been clear for more than two years now that the enormous fees paid to these companies are completely unjustifiable in
terms of actual sales generated (one client's cost per customer acquired exceeded U.S. $13,000). Off-the-record comments by other online heavyweights confirm the poor performance. As a branding move, it might make sense. But don't count on a reasonable ROI if you're actually trying to sell merchandise or services...
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Quote of the month
In Japan, large firms don't want to alienate retailers in their sales channels by selling directly to consumers (the "channel conflict" problem). But how long can this last? Says a managing director at SONY, which sells its PCs, televisions, audio the equipment, and other products directly to consumers online, "it's inevitable that manufacturers go direct..."
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Tim Clark
Editor
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Copyright 2002 by Ion Global
All rights reserved
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Ion Global
Japanese e-business specialists
http://www.tkai.com/ http://www.jir.net/
Tokyo Tel. (813) 5464-0384 Fax 5464-0387
Portland Tel. (503) 235-4433 Fax 235-4422
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