Meanwhile, Japan Airlines (JAL) reports that 5% of all its reservations are now made online.  And in the b-to-b arena, office supply seller/ delivery service Askul claims it had sales of 160 million yen in December of last year. 

Yesterday MITI released results of a study that predicts Japan's business-to-business electronic commerce market will grow more than sevenfold over the next five years to approximately 68 trillion yen ($566.7 bil).  During that time, the portion of all business-to-business transactions accounted for by electronic commerce will rise to 11.1%, up from less than 2% today, according to the study.  The study also foresees Japan's business-to-consumer electronic commerce market growing more than fiftyfold to approximately 3 trillion yen ($25.0 bil) over the next five years, up from 65 billion yen ($541.7 mil) today. 

While the numbers will continue to be relatively small compared to the U.S., there's no question Japan is number two worldwide in e-commerce.  Just ask the guys at Amazon.com, Dell, Outpost.com, REI, etc. who watch the orders come in...

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Internet used by 11% of households in Japan

The Internet is used by 11.0% of all households in Japan, according to an MPT report on communications trends for fiscal 1998. (In Japan, the fiscal 1998 year runs through March 31, 1999).  The figure was up nearly five points from 6.4% in fiscal 1997.  Since Japan has more than 40 million households, that means more than 4 million households have dial- up access to the Internet, if the MPT's projections are correct.  That's a lot of households...

The report also noted that nearly 58% of all households in Japan have either a cellular or PHS telephone.  It is the first time that the mobile telephone penetration rate surpassed 50% of all households.  A remarkable number.  More on the portable world below... 

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Interview with Mayumi Nakamura of PSP, Inc.

This month we enjoyed on and offline chats with Mayumi Nakamura, Vice President of the Japan Business Group at Pacific Software Publishing, Inc. (www.pspinc.com) in Redmond, Washington.


- Tell us the Mayumi Nakamura story: How did you come to be Vice President of Pacific Software Publishing, Inc.?

I went to a Japanese university for one year, and decided that was not what I wanted!  So in my sophomore year in Japan, I quit and came to Portland State University.  I did my BA there and, during that time, began work as a research assistant on campus working on databases.  That is when I fell in love with the whole world of computing.

I graduated from the Portland State University MBA program and, because of my background as a research assistant at the school administration office, I really wanted to get into the "high-tech" sales & marketing field in the U.S.  I was doing some networking in the Seattle area and met a person at the Washington State Economic & Trade Department who introduced me to PSP.

With the growth of PSP, I have been able to ride the wave of the Japanese consumer PC market.  And here I am!


- With www.JapanCentral.com, your Seattle-based service whereby you sell software online to buyers in Japan, you've directly experienced the viability of selling offshore/online into the Japanese market.  What factors are driving Japanese buyers of software away from traditional channels and toward online channels such as JapanCentral?

There are a few factors:

1.  Being able to purchase products from overseas cheaper than other so-called "licensed" products in the Japanese domestic market.

2.  We have targeted Macintosh users who have limited choices in Japan today.  This focus has not only given us a chance to reach Japanese customers, but to draw media attention in Japan, as well.

3.  Japanese language customer service:  Although we are based in the U.S., we conduct all of our sales and customer service in Japanese. And hopefully offer QUICK response to users as well. Users shouldn't feel any difference between using our site and using a site in Japan.

4.  As for retailers, we provide profitable, yet market-compatible, pricing for our products.  We back them up through our site as well as through our marketing.  As you know, we also sell directly to retail stores.


- Recent survey results suggest that a very high percentage of new Internet users are women.  Based on your experience with online  shoppers, do you see the demographic profile of the typical user changing?

Being a woman myself, I sure hope so!  Yet many of our customers are men. And this is probably because men still make up the majority of PC users in Japan. But I do hear that the percentage of female users has been increasing, especially young women.  This is an area to watch.


- We're finally starting to see some practical, money-saving, consumer- friendly Internet applications in Japan.  Today, for example, Microsoft announced a joint venture with Yahoo! and Softbank to roll out a Japanese language version of its CarPoint service.  In what other areas (finance, travel, insurance, etc.) do you see the Internet making significant inroads?

As for e-commerce, I believe good service is the key to success. Online services can succeed in many fields, as long as they meet the customer's expectations and alleviate concerns about using the Internet in financial transactions.  The commitment to the Japanese market must be evident in the depth of the site and all aspects of the service. Dive in head-first or don't dive in at all!

But don't overlook the power of non-commercial online activity.  Individuals in Japan have some pretty good sites, sharing and promoting their own interests on the Web.  It is a place not only for commerce but also a place for people to meet and exchange information.  Japanese people are very good at seeking and providing information on a personal basis.  There are some very powerful individual home pages in Japan, and some very influential Web masters who operate non-commercial sites.

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Industry briefs


Attention, finance folks:

FUJI BANK and YASUDA TRUST & BANKING will bring together electronic banking, Internet banking and other settlement system technologies to form the Fuji Technology Group in fiscal 1999.  An integration of system development divisions and other organizations affiliated with both companies, the group will handle electronic banking, cash management services and related settlement services for other financial institutions.  The firms are considering spinning the new unit off into a separate company.


Finance Web site will debut

Systems developer BBI will team up with POLESTAR INVESTMENT MANAGEMENT to set up an investment Web site.  BBI will use its proprietary database technology to build and manage the system, and POLESTAR will provide stock and market reports, including in-depth analysis of individual stocks from a medium-term perspective, and sell reports based on technical analysis.  The companies are also seeking the participation of small securities companies.


Now it's finance info and mobile phone users...

INVESTATION, provider of an investment information channel on satellite television service SkyPerfecTV, has teamed up with QUICK to provide stock, currency and other financial data to cellular phone and PHS users at no charge.  The purpose of the new Stock and Fund Service is to build a subscriber base and enhance recognition of the company's satellite channel.  The index quotes are provided in real time, while individual stock and currency quotes are updated every 20 minutes.


And one last blurb on money...

Infoseek Japan operator DIGITAL GARAGE launched Money Channel, a new Infoseek search site feature that provides visitors with a comprehensive range of financial information.  By cooperating with various financial data firms, the company hopes to offer Internet users specialized information that targets a wide range of readers, from amateurs to institutional investors.  Specifically, Money Channel will provide stock prices, exchange rates, information on savings and money market programs, and advice from financial planners.  The company is already cooperating with BRIDGE JAPAN, a wholly owned subsidiary of U.S.-based financial information provider BRIDGE INFORMATION SYSTEMS, to develop content.


Kinokuniya sort of rockin'...

Leading Japanese bookseller KINOKUNIYA recently announced rapid growth in the number of subscribers to its online Web site, BOOK/WEB, claiming a total of 80,000 members at the end of February.  The company hopes to increase its membership base to 100,000 by July, according to a spokesman. KINOKUNIYA expects to take in 1.5 billion yen ($12.5 mil) in first-quarter sales, a 50% year-on-year increase.  BOOK/WEB subscribers must pay an initial sign-up fee of 1,500 yen ($12.50), which enables them to choose from a selection of 1.3 million Japanese and 20,000 Western books.  


NEC getting into e-commerce service sector

NEC will begin offering a full slate of corporate e-commerce services.  One of its first projects will be to help book retailer BUNKYODO roll out in June a major Web site for online sales of about 1.2 million books, CDs, and videos.  NEC's services will cover credit card payment systems, support for product delivery, customer management, and electronic ID verification.  For the electronic payment system services, companies pay a signup fee of 50,000 yen ($417) and a monthly fee of 10,000 yen ($83). 


Women-oriented online research service debuts

Tokyo-based NETWORK COMMUNITY CREATION (NCC), a developer of members- only online communities aimed at women Internet users, has launched a full-scale online market survey service.  The service is unique, the company claims, because the women volunteers, or "monitors," who participate in the company's surveys do so out of personal interest in content services, thereby enabling the company to acquire survey responses that are more honest and reliable.  As part of the new service, NETWORK will compile survey data useful in product development and sales promotions and provide it to corporate subscribers.  Companies will pay a monthly fee of 50,000 yen ($417) and will be required to sign a one-year contract.  NCC expects to generate 250 million yen ($2.1 mil) in advertisement and survey service revenues.  


Yes, portable is hot...

SHARP will enter the content business.  The company, in cooperation with INTERNET INITIATIVE JAPAN (IIJ), launched an ISP service for Zaurus PDA users on March 20.  Four companies including RECRUIT and PIA will provide information for the service which will be available for annual fees ranging from 300 to 500 yen ($2.48-4.13) depending on the types of content subscribers use.  SHARP is aiming to sign up 250,000 subscribers to the service by the end of March 2000 and take in 3 billion yen ($24.8 mil) in sales.  In sync with the move, the company will release a new Zaurus model which can take full advantage of the new content service.  Priced at 38,000 yen ($314), the Zaurus Eye Getty is a 11mm-thick unit which weighs 135g and enables users to sign up for the content service in about three minutes. 

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Are cell phones, PDAs taking over Japan's Internet world?

Yes.  And with good reason: PCs are among the most annoying devices ever concocted by man, and they deserve to be replaced by machines that work reliably.  In Japan, maybe they will be - at least for the majority of Internet users.

With 45 million subscribers, Japan's mobile telephone user base is already three times as large as the base of consumers using PCs to connect to the Internet.  And these cell and PHS phone users are accessing the Internet in ever-increasing numbers.  Some informed industry watchers are confident that within two to three years, the number of people accessing the Internet with their mobile phones will outstrip the number of consumers accessing the Internet from PCs.

Adding weight to the predictions, Sega forecasts that one million people will be using its Dreamcast game machines to access the Internet a year from now.  More than 150,000 Dreamcast users went online only a month after the device was released...

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Leverage that monopoly!

NTT has unveiled a service dubbed "Calle" whereby consumers can have charges for purchases made online automatically added to their telephone bills.  How convenient!  There's no monthly charge for the service if you use NTT's dedicated access points, but Internet users must pay 80 yen per month if they're "outside the fold," so to speak. It has always amazed me that Japanese companies can ask consumers to pay for the privilege of shopping online with them.  Maybe that's one reason Kinokuniya, which charges consumers a 1,500 yen signup fee, has 80,000 users, while Amazon.com, which charges nothing, has 8 million...

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Tim Clark
Editor

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Ion Global (USA)
Japanese e-business specialists
http://www.tkai.com/
Tel. (503) 235-4433  Fax (503) 235-4422
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