Japan Post to launch e-commerce and fulfilment service

Jun 15

Japan Post will be publicly listed next year and has been preparing a move into a brasher, more commercial world for years. Its latest plan is to exploit its trusted brand, post office network and logistics to create a one stop shop e-commerce service emulating the merchant services of Rakuten and Amazon and the logistics capabilities of Yamato and Sagawa.

Japan Post plans to launch a full service e-commerce and fulfilment service from this Autumn. As well as shipping, Japan Post will offer a complete end to end e-commerce package covering online store creation, payment processing, warehousing, shipping and payment collection. The service will compete with the likes of Yamato on logistics, but also Amazon, as well as Rakuten’s own nascent efforts to build a chain of warehouses to handle shipments too. In theory the service will also aim to offer the set up simplicity of services like stores.jp.

To offer the service, Japan Post will work quickly to expand its warehouse capacity by as much as seven times to around 130,000 sqm within the next two years. It will also buy in more web-store development specialists, create a payment processing arm, and expand call centres. It will leverage the existing network of 20,000 post offices which it regards as giving it a crucial advantage over competitors. Post Offices will not only be used as optional collection points for deliveries but also to advertise the service and promote the wares of its merchants.

Japan Post is also expected to set up a training programme for post office staff to enable them to advise small businesses and individual traders on setting up an e-commerce business through Japan Post, and offer advice on how to market products online, as well as consumer trend information based on data from the online portal and its other data resources. This kind of hand holding approach is expected to encourage numerous small and medium sized businesses, especially those specialising in regional product, to get past their fear of the complexities of online retailing.

In essence Japan Post will aim to offer a one stop service with the benefits of Rakuten, but the in-house fulfilment services of Amazon, all while offering a human interface for merchant queries through its post office network.

Looked at from this perspective, the idea seems compelling. Japan Post is already feeling the pressure to update and broaden its revenue sources due to both the loss of income from digital communications but also the likely public listing in 2015 which will bring it under the glare of shareholders for the first time. Japan Post has a lot going for it and is an under-exploited resource. It is a highly trusted brand, not least as the biggest repository of Japanese savings.

Japan Post also has experience in direct marketing. It has a large and well-regarded food direct marketing business, which will form a strong base for the new business, and it recently created a joint venture with Isetan-Mitsukoshi called JPMitsukoshi Merchandising, focused on direct marketing of non-food categories like apparel, accessories, home, and health to complement its existing direct mail food business. The first catalogue, called Tanjosai, was distributed in April.

Japan Post has plenty of international links too. In 2012, for example, it tied with Singapore Post to create a more seamless cross-border fulfilment service for merchants called Ezy-Fulfilment For E-Commerce Trader. The service includes everything from inventory control and inspection to picking and packing, export documentation, shipping and final delivery. Merchants store product in a warehouse in Japan, for onward shipping by Japan Post. It also has a collaboration with Rakuten to provide international shipping services for its merchants.

If Japan Post implements the service well, it could become a major player and even a threat to existing services, while also providing an international window to help boost exports. While the unparallelled logistics of Yamato, Sagawa and other transport services will mean they continue to prosper as the e-commerce market expands, it is Rakuten and Amazon’s Market Place that will find themselves the most threatened by Japan Post. Rakuten in particular looks vulnerable because although it already serves many regional merchants, it lacks its own fulfilment services for most products and merchants. Japan Post’s well-regarded brand and human interface at the local post office may well give it the nod when a trader with little knowledge of the online world looks to broaden his customer base.

Japan Post adds consumer friendly options for e-commerce

From June, Japan Post will also expand its shipping services for both small businesses and CtoC transactions. Its Yupack service will now allow larger box shipments in order to compete against the likes of Yamato and Sagawa. As is normal for posted items, if the recipient is not at home, it will also undertake to hold packages at the nearest post office. Japan Post thinks this combination will be popular and estimates it will ship 150 million packages in the first year.

In addition, Japan Post plans to make returns simpler for both vendor and customer alike through its Return Pack service. Merchants will be able to buy job lots of return packs from Japan Post consisting of a folded box, label and optional pre-paid stamp and ship these to customers who wish to return an item.

The CtoC service, called Click Post, is designed to simplify CtoC fulfilment. Starting with Yahoo Auctions, vendors will be able to use their Yahoo ID to click through to Japan Post and pay postage through Yahoo Wallet, and then simply print out the label on their home printer, complete with the buyer’s address.

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