Tsutaya .vs. Rakuten

M-Commerce: Leveraging Retail Sales through the Mobile Platform

May Su Aung – msaung@iuj.ac.jpBryan Copeland – bcpld@iuj.ac.jp

TSUTAYA: ProfileTSUTAYA: Profile

Net Sales: 3,043 million ¥Ordinary Income: 579 million ¥ Net Income: 436 million ¥ * TOL – Tsutaya Online** Estimated, year ended March-to-March, 2006 fiscal year; based on $1 = ¥132.06

Corporate Headquarters

Tokyo

Established 1983 (TOL - 1999)

Employees/TOL* 100

Subscribers/TOL* 18.55 million

Wireless technology

i-ModeMovie Mail, TOL (mobile)LinkShare

Parent company Culture Convenience Club Ltd(CCC includes Tsutaya and TOL)

Approach to Mobility

How does Tsutaya do it?• In 1994, CCC built a sizeable customer database

• Maintain a dynamic, always-on picture of individual entertainment tastes and preferences and personalize product offerings by combining data with mobility via i-Mode service.

How does it all work for the consumer?• TOL*, Tsutaya’s wireless i-Mode site, email consumer whenever the

next release of the brand which consumer bought last time is available (or notify about clearance sales)

*Case Study -- Tsutaya, a Tokyo Video Store, Goes Mobile: http://www.cioinsight.com/c/a/Past-News/Case-Study-Tsutaya-a-Tokyo-Video-Store-Goes-Mobile/

Business Strategy

Store Development Strategy Bringing the 3000-Store Vision to Reality– The market radius for its retail locations: a 10 minute

customer destination

– They envision the potential to develop and open 3,000 stores in Japan by assuming that one TSUTAYA location exists for every 40,000 citizens.

Enhanced IT to Support Store Operations

• The CCC has developed a number of information technologies (IT)

– To support operations, including the (AMS) – To analyze daily and hourly product movement at each store– To execute rental product orders at franchise headquarters

on behalf of franchisees.

• The CCC connected all stores to franchise headquarters with a knowledge-sharing system called TSUTAYA NAVI, an IT platform for creating & sharing insights to support the resolution of store operating concerns.

Clicks & Mortar (C & M)

• To generate synergies between physical TSUTAYA in-store services and the Internet entertainment portal (TOL).

• Provide a Marketing function: TSUTAYA online, retail customers and TSUTAYA stores are directly connected via Internet.

• This connection, both pinpointed and immediate, provides a marketing function that other companies do not possess.

Monthly Sales & Membership

Member Growth(Customer Acquisition Strategy)

• 60% of 19-year-olds in Japan are "active Tsutaya members”

Market Share (FY2005)

Share % in parentheses: Unit billion yen

RAKUTEN – ProfileRAKUTEN – ProfileCorporate Headquarters

Roppongi Hills, Tokyo

Year founded 1997 (RA - 2003)

Employees/RA 200

Subscribers/RA 17.3 Million*

Wireless technology

i-Mode (DoCoMo partnership)

EZWeb, Yahoo!Rakuten Auctions, Portal shops

Parent company Independent

Net Sales: 33,636 million ¥**Ordinary Income: 6,937 million ¥** Net Income: 3,731 million ¥** * ALL Raktuen Divisions** ALL Rakuten Divisions; Estimated, year ended March-to-March, 2006 fiscal year; based on $1 = ¥132.06

Rakuten – Mobile Strategy

• Eyeing mobile auction market

• Partnership with NTT DoCoMo on Rakuoku

• Spin-off of Rakuten Auctions on the Mobile

• DoCoMo has a 40% stake (4.2 billion 円 )

Case Analysis – Rakuten Ichiba: http://www.slideshare.net/icestorm/case-analysis-rakuten-ichiba-presentation

Rakuten – Mobile Storefront

Rakuten – Financial Highlights

• Travel Bookings via Mobile Phone

Mobile Auction Market Share

NetPrice64%

Yahoo! Japan17%

Rakuten18%

Other1%

Online Auction Market Share

Yahoo! Japan81%

Rakuten16%

NetPrice0.1%

Other2.9%

Rakuten – Business Model

Rakuten – Operating Margin

Rakuten – Mobile Future

• Pushing Rakuten Auctions on the Mobile

• Tie-up talks with Tokyo Broadcasting Systems, Inc. (TBS); Internet TV negotiations

• M-commerce, focused on:– Recommendation technology– Captivating Contents– Product-placements– Ad Relevancy– Increased Auction traffic/sales