Yamato launches e-commerce solution, challenges Amazon

Jun 14

Yamato will launch an e-commerce package for retailers this month, leveraging its vast logistics base. The new service brings competition for Amazon and Seven & I, with rapid fulfilment to customers and backend support, while crucially helping Rakuten and other portals solve their problems with patchy merchant deliveries. Small merchants will even be able to offer same day delivery in key parts of the country.

Yamato Transport will launch new e-commerce support services for SMEs and even individual retail stores this month. The service, called Yamato EC Solutions! or YES! for short will offer a complete supply chain solution, covering payment gateways on client websites through to inventory control, warehousing, delivery and product returns.

Retailers can have YES! set up an entire online operation, but otherwise will only need to manage their own websites, either hosted directly or through third-party portals like Rakuten or Yahoo (in the latter case payment is handled by the portal and linked to Yamato). The service can reduce personnel costs for e-commerce operations by at least a third.

The new service aims to reduce the administrative burden on smaller brands of managing online orders, fulfilment and post-purchase support. It will also allow smaller companies to offer same day delivery and pick-up at local convenience stores. Sagawa’s recent deal with Lawson is similar but focused on the consumer, with Sagawa providing on-demand home delivery to homes within 500m of each Lawson store.

While Yamato is by no means the first company to target SMEs as an e-commerce service provider, few others can match it for its existing home delivery business – it currently controls 40% of total home parcel deliveries in Japan, putting it ahead of even Japan Post.

In many ways, Yamato is offering an alternative to many of the functions offered to merchants by Amazon – it doesn’t offer the portal function, but when combined with the likes of Rakuten the result is the same and Rakuten and other portals could benefit significantly. If many of their merchants take up Yamato’s offer, it immediately reduces the need for portals to develop their own logistics in order to consolidate and speed up deliveries. This is crucial as, currently, lack of consolidated deliveries and hit-or-miss merchant fulfillment, including slow delivery, are all major weak points compared to Amazon.

In addition, with Amazon again setting the precedent, same day delivery is now the norm in Tokyo and Osaka, an expectation beyond the capabilities of most smaller firms, but again Yamato says it will make this possible first in Tokyo and later in other major cities.

Yamato claims there are already 200,000 SME retailers with active and viable businesses online, and by next year it is targeting 15,000 clients for its new initiative.

The transport giant will also allow businesses to pick-up and drop-off deliveries at 20,000 Familymart convenience stores and its own 4,000 depots across the country. Amazon recently did a similar deal to deliver through Lawson and Familymart stores, but smaller retailers can’t access this service directly.

The other major firm threatened by this move is Seven & I. Although Seven & I is planning to be the ‘first true omnichannel retail system’, Yamato is offering a similar service from across a much wider range of retailers and one with even more delivery points nationwide. There’s every reason to expect even medium sized firms to consider Yamato as an e-commerce service and fulfilment provider.

E-commerce is clearly a key part of the future of retailing regardless of the size of store, firm or type of product, and Yamato’s new service will be welcomed by SMEs and portals alike. The most recent estimates put online sales last year at above ¥13 trillion in the B2C sector alone, roughly 9.5% of total retail sales. Nomura Research expects the market to hit ¥20 trillion by 2018. Japan’s hugely concentrated urban demographics, long working hours, along with an already established love of smartphones that turn a typical 90 minute commute into a shopping experience, are all set to help e-commerce boom.