Terrie's Take 809 -- Big Shakeup in the Loyalty Points Sector, E-biz news from Japan

Terrie's Take terrie at mailman.japaninc.com
Mon Jun 22 00:18:05 JST 2015

* * * * * * * * TERRIE'S TAKE - BY TERRIE LLOYD * * * * * *
A weekly roundup of news & information from Terrie Lloyd, a long-term 
technology and media entrepreneur living in Japan.

General Edition Sunday, June 21, 2015, Issue No. 809

- What's New -- Big Shakeup in the Loyalty Points Sector
- News -- Toyota exec in drug arrest
- Upcoming Events
- Corrections/Feedback -- Ryan Air is worse than Narita Terminal 3
- Travel Picks -- Mann's wines in Yamanashi, Yaki-curry Kyushu
- News Credits

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This last week, Itochu entered into an exclusive license with 
California-based Ifeelgoods, the USA's leading online digital rewards 
company, to start offering digital content such as music and videos to 
recipients here in Japan, and in an optional second phase, possibly 
throughout Asia. The two companies jointly said that they would try to 
sign up at least 500 Japanese companies to Ifeelgoods end-to-end 
loyalty-points-and-rewards platform, and that the gross revenue target 
over the next three years is a massive JPY100bn.

That's a lot of money, and hints to how big the rewards market in Japan 
may become.

Itochu's move is interesting for several reasons. Firstly because it is 
the latest in a slew of loyalty points and rewards systems tie-ups and 
deals that started in earnest earlier this year. Secondly because Itochu 
owns Japan's third largest convenience store chain, FamilyMart, and 
because "Famima" itself entered into a joint JPY20bn investment 
alongside Softbank in March to buy 30% of loyalty points company T-Point 
Japan, thus linking the almost 60m-member points club with the USA's 
most proven end-to-end software platform.

BTW, in case you didn't know, T-Point Japan is owned by Culture 
Convenience Club subsidiary (CCC). You'll know them for their ownership 
of Japan's largest video store chain, Tsutaya.

--------- Help Us Test New No-Network Maps App ------------

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application, so please help us if you can.

To register as a tester, send an email to info at metroworks.co.jp. To 
register for Japan Travel, go to: http://en.japantravel.com/join

[...Article continues]

Right now T-Point is the third largest of the three giants in the 
Japanese points-and-rewards industry, the other two being 
Mitsubishi-Recruit's Ponta and Rakuten's Super Points. T-Point was 
established by Tsutaya as a means of keeping customers coming back to 
its video stores in the face of ravages by internet players, and since 
its spin off the company has been expanding ever since. T-Point's big 
break came in 2012, when Yahoo Japan took a 15% stake and started 
rewarding its 80m+ users with them. There are now around 59m T-Point 
card members. Other major participants in the T-Point system include: 
FamilyMart, Eneos, Skylark restaurants, drugstore chain Welsia, and of 
course Softbank Mobile.

The competing Ponta platform is run by Mitsubishi subsidiary Loyalty 
Marketing, and has around 69m members. Other key players in the Ponta 
alliance include Lawson convenience store chain (also owned by 
Mitsubishi), database media giant Recruit, and as of last month, NTT 
DoCoMo, which will tie its own 50m loyalty points members to the Ponta 
system. If NTT DoCoMo were to fully integrate into the Ponta system, 
something it might be encouraged to do, then that would probably make 
Ponta the largest player in the rewards space.

And who is largest at present? According to the Nikkei, it's Rakuten, 
with 99m Super Points users. We find this number a bit hard to believe 
given that it amounts to almost every adult in Japan. It's more likely 
that there are people with multiple Super Points accounts. But even 
allowing for overlap, which all the other systems have as well, Rakuten 
still appears to be the biggest. In order to prevent erosion of its 
leadership position, we expect Rakuten to start doing more data-sharing 
deals of its own. Although early days, the company's tie-up with 
Marubeni back in 2014 to venture into the electricity sector might be a 
hint of things to come.

So why all the movement in the points and rewards sector? There seem to 
be a number of drivers. The first is that the government is relaxing the 
law on consumer data sharing between companies, allowing sharing to 
occur so long as the data is anonymized. If you have data on people you 
can target your marketing and offers, and if you get it right then you 
get to steal market share away from the other players.

The second driver is the deregulation of semi-public companies such as 
the power utilities, banking (mobile payments and E-Commerce), and 
telecoms (specifically deregulation of business limitations on NTT). 
This is causing both excitement by new entrants, and semi-panic by the 
incumbents. Loyalty systems are of course most desired by the 
incumbents, so that they can reduce the attrition that will occur as new 
competitors start slashing everyone's margins.

This would explain why in March, Tokyo Electric Power Company (TEPCO) 
announced that it would seek a partnership with both a mobile phone 
carrier to start services bundling, and also a rewards program 
provider/partner. The power company has solicited proposals from all 
three rewards players and on its side has 27m retail and commercial 
customers that it can bring to the table. When the UK liberalized 
electricity sales in 1999, in the following 15 years at least 60% of 
consumers had switched to other power companies, mostly motivated by 
power, telecoms, and gas bundling deals, and rewards. Everyone expects 
the same thing to happen here, and certainly KEPCO and other regional 
power companies are watching and getting ready to follow suit. So the 
first half of 2015 represents a ground-shift in the data tracking and 
sharing industry.

...The information janitors/


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+++ NEWS

- Toyota exec in drug arrest
- Netflix moving forward in Japan
- More infrastructure investment into Asia
- More infrastructure investment into Asia
- Tax loophole creates profitable gifts industry for small towns

=> Toyota exec in drug arrest

"What was she thinking?" was our first reaction when we heard that 
Toyota's top female executive had been arrested on drugs charges in 
Tokyo after illegally importing a prescription medication from the USA. 
The executive, Julie Hamp, is apparently still in jail as police 
interrogate her as to why she had the small shipment of the pain killer 
oxycodone sent in a package alongside other personal effects, and which 
had an inaccurate customs declaration. No doubt she didn't think the 
medication was such a big deal, just a month's supply, but it turns out 
that the Japanese authorities are taking the case very seriously. ***Ed: 
To its credit, Toyota is sticking by Hamp and saying that they trust 
her, so most likely Hamp will be allowed out again after suitable period 
of embarrassment and apologies from all concerned. A similar case 
earlier this year saw a 26-year old American women held for 18 days 
until her Dad, a prominent lawyer in Oregon, wrote a letter to the 
prosecutors apologizing for the import of a small amount of Adderall 
medication, and more importantly expressing remorse.** (Source: TT 
commentary from usatoday.com, Jun 19, 2015)


=> Netflix moving forward in Japan

Streaming video service Neflix is making steady progress in its 
establishment of a business in Japan, by not just bringing dubbed U.S. 
programming to Japan but also cutting deals and creating original 
programs for the local market. The company will launch its service in 
October, and apparently has content coming from collaborations with Fuji 
TV, Yoshimoto Kogyo, and others. In some cases the content will be on 
multiple delivery media, starting with streaming video on the web and 
mobile, then moving to broadcasts on terrestrial and satellite TV. An 
analyst at Zachs.com reckons that Netflix has a good chance of success 
not only because of national high-grade internet infrastructure but also 
because pay-TV is still in its infancy in Japan (just 38% of the viewing 
population). (Source: TT commentary from zacks.com, Jun 19, 2015)


=> Move to generic drugs to be accelerated

The Ministry of Health, Labor and Welfare (MHLW) has said that it will 
accelerate the move to generic drugs to treat those in the public health 
system. Currently Japan spends about JPY50trn on drugs, of which 20% are 
prescription drugs, and this cost is expected to increase dramatically 
over the next 20 years. The acceleration plan calls for the percentage 
of drugs that are generics to increase from the current 46.9% to 60% by 
FY2016, and to 80% by FY2020. As a comparison, generic drugs already 
account for 90% of the market in the USA and 82.5% in Germany. (Source: 
TT commentary from jdsupra.com, Jun 19, 2015)


=> More infrastructure investment into Asia

As a partial rebuttal to China's Asian Infrastructure Investment Bank 
(AIIB), PM Abe last month unveiled a plan to increase Japan's lending 
for infrastructure projects in Asia by 30%, to US$110bn over the next 
five years. Abe pointedly said that the money would provide high-quality 
Japanese technology and support, and that there is "no room for cheap 
and sub-par". It appears that while some of the money will be channeled 
through the existing Asian Development Bank (ADB), which already has 
capital of US$153bn, the Abe government is also going to extend loans 
through its own organs, such as the Japan Bank For International 
Cooperation (JBIC), without requiring recipient government guarantees 
for those funds. ***Ed: Sounds like a lot of unsupervised taxpayer money 
to us.** (Source: TT commentary from wsj.com, May 21, 2015)


=> Tax loophole creates profitable gifts industry for small towns

An entertaining piece from the New York Times covers the tax loophole 
(Furusato Nozei) that allows people who "donate" cash to small rural 
towns in return for a tax rebate. Apparently a number of towns have hit 
on the idea of creating "thank you" gifts to encourage these donors, 
where the gift is worth up to 80% of the donation. As a result, donors 
can receive both a tax deduction AND a worthwhile gift. The article 
mentions the town of Hirado in Nagasaki, which provides donors with 
lobsters, oysters, veges, and even fold-up electric bikes. As a result, 
the town now has more donors, 36,000 of them, than it does residents. 
***Ed: Never underestimate the ingenuity of country folk who after all 
need to survive the urban shift.**(Source: TT commentary from 
nytimes.com, May 31, 2015)


NOTE: Broken links
Some online news sources remove their articles after just a few days of 
posting them, thus breaking our links -- we apologize for the inconvenience.


-------------- Have a Tour to Promote? --------------------

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inventory on our new Tours Marketplace (http://bit.ly/1IsujUw). Listing 
is free, and only successful bookings will attract a marketing fee. Take 
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exposure you need to develop your business. We are particularly 
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Operators and agents wishing to apply, contact info at japantravel.com


------------------ ICA Event - June 22nd-------------------

Speaker: Pieter Franken - Chief Technology Officer, Monex Global Vision
Title: "How has Open Source technology helped my Organization"

Details: Complete event details at http://www.icajapan.jp/

Date: Monday, June 22nd, 2015
Time: 6:30 Doors open, Buffet Dinner included and Cash Bar
Cost: 4,000 yen (members), 6,000 yen (non-members) Open to all. No sign 
ups at the door!!!!!!!
RSVP: By 5pm on Thursday 18th June 2015. Venue is The Foreign 
Correspondents' Club of Japan



=> A reader reckons that whatever we moan about concerning the new 
Narita Terminal 3 airport, it can't be as bad as experiences he's had 
with the original LCC airline, Ryanair, in Europe.

*** Reader says: Concerning "Narita is Worst Airport", I am going to go 
have a ride on that myself in a few weeks so I can help fill in the 
blank spaces. HOWEVER my guess is that it is not that bad. Have you ever 
flown Ryanair? The King of LLC? If you have not, then this article makes 
sense. I am simply a layman and feel that discount airlines have to cut 
away a lot of the "services" to achieve the low prices. This is a two 
way street!!

Frankly I "HATE" Narita for a shopping list of other reasons, all things 
considered (after all they started with clean slate and had the 
possibility to study all the success stories of modern airports around 
the globe). Haneda sucks too... but it is what it is.

I will give them one thing. Everything probably works, which despite 
being basic, is not something you can depend on in Europe or the US of A.

Anyway, Ryanair will land you far from downtown Paris or Milan, 
requiring you to take a 1 1/2 hour non-air-conditioned bus ride, which 
is also not free. Often if the plane is late, then the bus is gone and 
you have another expense finding somewhere to stay (or a taxi ride from 
town).  But dat's the deal!!! Don't bother writing to O'Leary either, 
although in recent years he has made somewhat of an effort to up the 
airline's image. He only did this after every Noveau Internationale 
businessman in Britain and Ireland started joking about the toilet charges.


While the airports served by Ryanair don't get a mention, they are 
pretty much the same deal. Check In and Boarding shut promptly. You have 
very strict and continuing Nazi-like baggage rules. I saw one poor 
Frenchman in Shannon one time being asked for 1,800EUR as he brought two 
large bags with him on his way presumably home. Most people (luckily for 
me) don't pay the 2 quid to avoid the queue and that means luck of the 
draw in seating. In recent years the LCCs have cottoned on to the fact 
that faster boarding can be achieved with seat allocation. I have 
watched old ladies back in the day being physically knocked to the 
ground in the rush (Xmas circa 2005 I would guess) to get on a Christmas 
flight home from the UK.

You de-plane and either walk or get a bus to the terminal rather than 
the sky-walk. This cuts down on landing charges.

I conclude that LLCs are a fine option when traveling light and without 
kids. Otherwise, if you can afford it, take a regular airline and thank 
the LCCs for pressurizing their airfares down a fraction. On the other 
hand a downside of the discounting trend has been that normal airlines 
now have to cut corners to make ends meet. This is not always a good 
thing either.



=> Tour of Manns Wines, Yamanashi

The Mann's Wines winery is situated in Katsunuma, surrounded by 
vineyards and peach orchards. The company is part of the Kikkoman family 
and their premium wines are branded with the Solaris label. You can get 
to the original facility about 15 minutes by car from the Katsunuma 
Interchange, however it might be better to go by train (and a 7-minute 
taxi ride from Enzan JR Station), then nobody has to miss out on tasting 
the wines because they are driving.

The tour begins with a movie explaining the history of the winery, then 
a guide will take you around the grounds showing major points of 
interest. Huge white fermenting vats stand behind the buildings, but 
because it was spring, they were unfortunately empty when I was there. I 
think there would be a lot more to see in autumn. Manns Wines started in 
Katsunuma, but the company now has another larger facility in Komoro in 
Nagano Prefecture, where the bulk of the company's production now takes 


=> Yaki-curry, Kyushu
The place to go for Kitakyushu's spicy specialty

Japanese diners love their curry dishes, but the town of Kitakyushu 
takes it one step further with a baked curry meal that has made the city 
famous. While you have over 40 choices of restaurants in Kitakyushu 
offering yaki-curry, you can't go wrong with the award-winning recipe at 
Princess Phi Phi in the Moji Port area.

Princess Phi Phi sits along the waterfront, a short block from the 
central square of the refurbished port. The restaurant can be initially 
confusing, as it offers diners the option of eating in a basement dining 
room or in a small cafe on the first floor. Next door to the cafe, a 
store of the same name sells clothing, jewelry and other goods.

Yaki-curry was first created in the 1950s in the Moji neighborhood when 
a local chef combined curry and rice, topped it with generous amounts of 
cheese and baked it all in an oven. The dish is finished off with a raw 
egg mixed into the curry. At Princess Phi Phi, the yaki-curry is also 
baked with at least a half dozen vegetables, ranging from potatoes and 
Japanese pumpkin to broccoli and fresh tomatoes. It's all topped with a 
few basil leaves.




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Written by: Terrie Lloyd (terrie.lloyd at japaninc.com)

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