Both Rakuten and Seven Eleven have been relying on Yamato Transport for such services to date.
As the market leader, Yamato currently enjoys a 42.2% market share of under 30kg shipments carried by truck, according to data published by the Ministry of Land and Transportation of Japan.
Seven Eleven previously charged 200 yen for delivery of lunch boxes, etc. from their shops for purchases exceeding 1,000 yen. From 7 May 2012, they changed that to free delivery for purchase over 500 yen and a delivery charge of 120 yen for purchases under 500 yen.
Delivery is being done by the shop manager and staff at the local Seven Eleven Convenience Stores. The aim is to create a stickier relationship between the shop staff and customers so that the staff can cross sell other items in the store.
Rakuten will commence its services for delivery of fresh produce purchased on Rakuten Mart first in the 23 wards within Tokyo. By the end of 2013, they plan to expand their branded delivery network to the entire Kanto region. (Tokyo and its neighboring prefectures)
Instead of enhancing their relationship with Yamato, Rakuten has decided to align with local small delivery agents who will wear Rakuten uniforms and caps. Rakuten’s Director was quoted as saying that there are even plans to “Rakuten-ize” their delivery trucks.
Cost management is probably a key element, but Rakuten claims that their top priority is to increase brand exposure.
Rakuten Mart is playing in the online supermarket space which may offer high volumes but low margins. By consolidating not just Rakuten Mart shipments, but also other purchases made on the Rakuten portals, the company hopes to increase its logistics efficiency.
Failed delivery attempts are the biggest profit drain for home delivery companies. In one discussion, I was told that an express delivery company’s cost for delivery increases by a factor of four in a country as small as Singapore.
But Rakuten says that consumers who order groceries online are very specific about dates and times for the deliveries to occur and they are very likely to be home for them. As such, they feel confident that failed delivery attempts would be minimal.
At the time of the publishing of the article, Yamato is quoted as saying they “are not in a position to comment” on these announcements/initiatives.
But if your largest customer announces that they will become your competitor, that must be a pretty bitter pill to swallow…
I heard once that already, Coca-Cola in the US has a contract with the State Department to avail their logistics network in the case of national emergency since their logistics network is expansive. But they do they already offer their logistics network to third parties akin to the way amazon offers server capacity as cloud services? Can this be the beginning of a cloud service boom in logistics?
Is this a diversification of players in the market in response to the current concentration which may later be concentrated again? (For example, can you foresee Rakuten selling their logistics services arm to someone like UPS, for example?) Or is this the new reality for posts and couriers – their largest customers becoming their competitors.
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