Lawson ties with Sagawa to compete with Seven & I and Amazon

Lawson and Sagawa are launching a new joint venture next month that will eventually see Sagawa take over delivery services for 12,000 Lawson stores across the country. Even more significant, Sagawa will use the stores as small depots for its existing parcel delivery service, as well as delivering orders from stores direct to customers’ doors. This will soon extend to include a whole range of retailers and brands that Lawson is now signing up in a bid to take some of the online business from the likes of Seven & I and Amazon.

Lawson has signed a landmark agreement with SG Holdings, the owners of the Sagawa Kyubin delivery service. The two firms will establish a new joint subsidiary in June, and will begin collaboration in Tokyo this year, expanding nationwide later on. The new venture will be 51% owned by Lawson, 49% by SG.

The new operation will launch from 20 Lawson stores in Tokyo next month. Sagawa will takeover inventory control, but it will also deliver orders made direct to stores either online or by phone to customers within a 500 metre radius of each store. This is in addition to its existing parcel delivery service. Carpark and backroom space at stores will effectively become mini-depots for Sagawa services.

In urban areas, where many customers are out working for much of the day, Sagawa will deliver packages to the nearest Lawson for pickup later on, available 24 hours a day. Even better it will hold packages at the local Lawson and then deliver immediately following a call/LINE message to the store once the customer arrives home. This is a neat solution to the significant ‘last mile’ bottle neck – a term for the wasteful repeat visits to empty houses to make a delivery – reducing costs and time wastage significantly, not to mention pollution.

Yamato offers a similar store pick-up service through other chains, but the new company will be the first to add in delivery of orders from the store itself.

By the end of this year, the new system will encompass around 100 Lawson stores in the capital.

In the distant past, Sagawa was seen as a business parcel delivery service, with main rival Yamato the residential delivery firm, but today both companies work in both markets. While Yamato has some 4,000 depots and parcel consolidation points nationwide, Sagawa has a mere 700 at present, so the new deal opens up the possibility of all 12,000 Lawson stores across the country becoming mini Sagawa depots, a brilliantly cost effective solution.

For Lawson, the tie with Sagawa allows it to compete with Seven Eleven, which has its own in-house delivery service operated by store staff from most of its stores. Outsourcing the service to a leading firm like Sagawa could even take Lawson one step ahead. Along with Familymart and Ministop it has already tied with Amazon to allow customers to pickup Amazon orders at its stores, and it is also planning a major expansion of its own online sales (loppi.jp).

Sagawa’s role will allow Lawson to reduce delivery fees too – at present it charges for smaller orders, but is reported to be considering emulating Amazon to offer free delivery. Lower costs will also be offered to new online store tenants, with Lawson hoping to attract apparel brands and catalogue retailers to its online store in large numbers – another potential rival to Amazon and Rakuten, not to mention Seven & I.

With METI estimating that B2C e-commerce transactions grew 17.4% to ¥11.2 trillion last year, retailers are increasingly keen to grab a share of the market. Uniqlo will also expand its online options and has recently established similar new logistics ties to Daiwa House Kogyo (see below), and Rakuten has recently tied with Japan Post to also improve delivery options for its customers.