Terrie's Take 910 - Food Delivery Wars in Japan - Who Will Win? E-biz news in Japan.
terrie at mailman.japaninc.com
Mon Aug 21 09:23:09 JST 2017
* * * * * * * * 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, Aug 20, 2017, Issue No. 910
- What's New -- Food Delivery Wars in Japan - Who Will Win?
- News -- Kickstarter joins crowdfunding crowd in Japan
- Upcoming Events
- Corrections/Feedback - Suggestions for U.S. action in Korea
- Travel Picks -- Organic food in Roppongi, Eel in Jimbocho
- News Credits
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+++ WHAT'S NEW
On July 20th we joined the party for the Japan launch of Singapore's
Honestbee company. Never heard of it? Then maybe you're not using social
media recently, because they have been advertising everywhere online
over the last 6 weeks. Honestbee is a food and shopping delivery company
that makes it even easier to be a couch potato, so long as you have a
working credit card. Primarily in competition with UberEats at this
stage, their main differentiator is that they have personal shoppers
located in or near their merchant partners, and so you can not only buy
restaurant meals, but now anything that is in stock at one of the
partners, THEN have it delivered to you within an hour. Currently
service is only within a number of inner Tokyo suburbs, but we suspect
it won't take long for them to expand elsewhere.
Like UberEats and similar services, you pay Honestbee a fee for
delivery, then separately a shopping fee. We've never used the service,
we admit, because those JPY500 units for various parts of the service do
add up, especially if you're using the service every day. Honestbee's
presenter in July mentioned that their best customer in Tokyo so far
does in fact order every day. Maybe he or she is a day trader making
millions of yen a month anyway. But for the rest of us, it's hard to get
excited when you can easily stop at a convenience store, Petit Maruetsu,
or Seijo Ishi on the way home. So overcoming that mindset is probably
Challenge Number One for them.
Versus shopping, restaurant delivery, however, does make a lot more
sense, because when you're hungry JPY500 doesn't present the same
hurdle, and besides, what you hunger for may be right across town and
cost more than JPY500 to fetch personally. This foible of human nature,
cravings trumping one's wallet, might explain why although Honestbee
started out as a personal shopping service, in February this year it
decided that in fact it would rather be a direct competitor against
UberEats and do restaurant deliveries.
The foreign food delivery giants are rather late to arrive in Japan and
so far you only have the two. Delivery Hero (including FoodPanda) and
Deliveroo are not here yet, and given the nature of the market they may
decide not to come at all. Food delivery has been part of the restaurant
scene in Japan for hundreds of years and although the market is large,
it is forecast to only grow fractionally from JPY1.93trn in FY2014 to
JPY2.15trn by FY2019. Aging society and thus the reduced availability of
delivery people has meant a fall in availability and thus demand. This
problem with manpower and the deliveries business has most notably
manifested in the recent turmoil in the parcel delivery space.
----- Gourmet Ride Event - Tohoku nature and flavors! -----
Two-day cycling tour in the beautiful countryside of Aomori and Iwate,
highlighted by gourmet cooking by famous chefs. Enjoy the bounty of
Honshu's northern region while enjoying the company of other cyclists
and local hosts. Learn more and join us!
Dates: Saturday 30th September thru' Sunday 1st October, tours include a
one-night stay at an onsen.
Details & Registration: http://bit.ly/2vPb4ao
Date: Saturday 14th October
Details & Registration: URL will be decided mid-August.
These events are hosted by The Cuisine Press Inc., email us:
jointheaction at or-waste.com
How well established is the Japanese food delivery sector? Well you can
go all the way back to the delivery of soba noodles ("Demae"), which
started some time in the mid-1700's. However, it was with the advent of
telephones and bicycles in the early 20th century that food delivery
entered its golden age. By the turn of the twentieth century there were
competitions among deliverymen to see who could carry the most soba
meals for customers. One picture on the following site shows a fellow
with food for 100!
After WWII, mopeds became common, and spawned some sophisticated
inventions to improve service - such as the once-ubiquitous anti-sway
delivery trays. These were developed to help ramen shops deliver full
soup bowls without spilling them. They are amazingly effective, and it's
amusing to watch foreign firms using back-strapped bags when such great
mechanical devices are available. You can buy them new here - a snip at
Yeah, so food delivery is nothing new for Japan.
There are of course local players who are offering services on a par or
even more advanced than the foreign competitors. One of these is Yume No
Machi Souzou Iinkai Co., Ltd., which is a mouthful to say and which
luckily runs a much shorter-named service called Demaekan. So let's just
refer to the firm as Demaekan... They are listed and are highly
sophisticated. As the largest specialty food delivery service in Japan,
they did JPY4.15bn in sales this last fiscal year, with net profit of
JPY347m. The market cap of the firm is JPY68.3bn, and shares have risen
significantly in the last 12 months as the company has figured out how
to balance members with unregistered customers.
As of July this year, Demaekan had 15,208 restaurants signed up for its
delivery service, was operating all over the country serving 1,635,863
orders (just in July) to 2,330,000 active users. Those are pretty
impressive statistics and are due to the company's savvy tie-ups with
numerous brandname players in the web and delivery markets, such as LINE
(which now owns 20% of Demaekan), Askul, Yahoo!, DoCoMo, and many
others. The firm has also been very active in the M&A space, consuming
smaller competitors on a regular basis and more recently adding skill
sets that would take it too long to build itself.
The driving force behind the strong growth of Demaekan is its female
CEO, Rie Nakamura, who joined the company shortly after it was founded
(1999) in 2001. Nakamura learned her craft at Culture Convenience Club,
and it shows - reading through the company history shows clarity of
purpose as she navigates the arcane world of food delivery in Japan
coupled with her vision to become a unifying force. She will need all
the vision she can muster, because in the last six months Rakuten,
Amazon Japan, and Seven & i Holdings (Ito Yokado) have all announced
that they are also entering (or doubling down on) the food delivery
sector as well. Seven & i will be teaming with Askul, so maybe they will
wind up actually using Demaekan to move orders - that is not clear yet.
So who do we think the winners will be? It's hard to say at this stage,
but you have to imagine that price-wise it will be a race to the bottom.
So long as Uber headquarters doesn't get consumed in a takeover, and
that the board now running the company can stomach a few billion more in
losses, then UberEats will be the price leader and mobile interface
trend setter. Demaekan will be drawn into a price competition with
UberEats and while they are currently insulated from erosion due to
UberEat's limited service area, once that company starts to expand this
will drive down Demaekan's profits and share price, eventually making
them vulnerable to a buy-out. By who? well, both Rakuten and Seven & i
have plenty of cash for takeovers.
Different topic. Eric Golden over at Fortress Investment Group told us
about an interesting event featuring Jonathan Siegel, who now lives in
Tokyo with his family of one wife and eight kids. In case you're not
familiar, Jonathan is the Chairman and Founder of Xenon Ventures, a
private equity firm focused on the acquisition, acceleration and exit of
high-margin software as a service companies. Previously, he led
Exceptional Cloud Services (acquired by Rackspace), Rightscale.com
<http://Rightscale.com>, RightSignature.com <http://RightSignature.com>
(acquired by Citrix) and RightCart.com <http://RightCart.com> (acquired
by Buy.com <http://Buy.com>). So yeah, he knows his stuff...!
The event will be held at Oakwood Premier Tokyo Midtown in the resident
Start time: 7:00pm sharp
Entrance fee: JPY1,000
Limit on seating: This event will accept the first 50 applicants only.
(All entrants will receive a free copy of his book.)
To book a spot, email: siegel.bookevent at gmail.com
...The information janitors/
- BitFlyer to launches Bitcoin trading in USA
- Kickstarter joins crowdfunding crowd in Japan
- Classic architecture makes Starbucks Higashiyama a must-experience
- Cerberus closes out its last Seibu shares
- Ever heard of somen noodles pumpkins?
=> BitFlyer to launches Bitcoin trading in USA
Japan's largest Bitcoin exchange, BitFlyer, has just opened an office in
San Francisco and plans to launch business there in the next two months.
They have recently won approval to operate in 34 states across the USA.
The company will start with just Bitcoin trading initially then expand
into more regulated cyptocurrency integrations next year. BitFlyer
raised JPY3bn in Series C money last year, increasing its overall
investment incomings to JPY3.6bn. ***Ed: Interesting to see how Japan is
becoming the trusted standard in Bitcoin exchanges here in Asia, even
after the Mt. Gox debacle. The government's early moves to recognize and
regulate Bitcoin seem to have really benefited operators like
BitFlyer.** (Source: TT commentary from coindesk.com, Aug 18, 2017)
=> Kickstarter joins crowdfunding crowd in Japan
Japan's online crowdfunding scene is about to get a little bit more
crowded, with the planned launch of Kickstarter Japan on September 13th.
Kickstarter is best known as a platform for gadget companies to get
funding (donations, not share purchases) to try to materialize their
projects - and of course is hyper successful in the USA. Although
Japanese start-ups can still use the U.S. version of Kickstarter, the
hope is that because the Japanese site will be in local language and
banking registrations will also be local, that this will encourage more
Japanese punters to back projects. ***Ed: Personally we think that
Kickstarter will be disappointed in Japan. Firstly because existing
sites here have proven that there isn't a lot of discretionary income in
people's pay packets here, and so projects tend to be funded to just a
tenth of the amount of U.S. ones, and consequently ambitions are also a
lot more modest (read, boring). Secondly, crowdfunded share purchases
are just around the corner, and for many small investors this will
represent a better investment opportunity, likely killing off the
altruistic nature of the current Kickstarter business model.** (Source:
TT commentary from theverge.com, Aug 17, 2017)
=> Classic architecture makes Starbucks Higashiyama a must-experience
Although it opened last month, we just had to cover one of Starbuck's
latest stores in west Japan to open - and which must surely take the
award for the most iconic location. The store is a refurbished two-story
traditional Japanese tea house in Higashiyama, Kyoto, built over 100
years ago. It comes complete with zen gardens front and back, zabuton
cushions, and somewhere to place your shoes (yes, you have to take them
off). ***Ed: Fear not, though, this Starbucks does come with WiFi and
regular seating for those needing a more comfortable position.**
(Source: TT commentary from hypebeast.com, Jul 05, 2017)
=> Cerberus closes out its last Seibu shares
Closing a sorry chapter in Japanese shareholder history, U.S. fund
Cerberus has sold its remaining shares in Seibu Holdings. Cerberus
invested into Seibu Holdings in 2006, about two years after the company
was delisted for securities fraud. Even though Cerberus was the largest
shareholder, with 35%, the company was unable to get Seibu's management
onboard and wound up having a very public fight with them in 2013 over
the appointment of some Cerberus-nominated board members. Once the
company relisted in 2014, the fund has been quietly winding down its
holdings until last week. ***Ed: No doubt the frustration of dealing
with an entrenched management was offset by a reasonable return on the
investment itself. Indeed in 2015 the shares peaked at twice the 2014
re-listing price.** (Source: TT commentary from japantimes.co.jp, Aug
=> Ever heard of somen noodles pumpkins?
We certainly hadn't until reading this fun article on the Yomiuri's
English-language news site. Kinshiuri, or spaghetti squash has the
interesting property of producing somen-like noodle fibers once boiled.
The vegetable was introduced into Japan during the Meiji period from the
USA, and quickly acquired a Japanese culinary heritage in the west of
Honshu. Kinshiuri are being harvested now, and are apparently delicious
with mayonnaise, maitake mushrooms, and pork. (Source: TT commentary
from the-japan-news.com, Aug 11, 2017)
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.
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Japan Partnership Inc. is urgently seeking an Administration Coordinator
to help run its small but dynamic international media business in the
heart of Tokyo that publishes Japan's number 1 English magazine,
Metropolis. Preference is for someone who is E/J bilingual but at least
native in Japanese with some English capability.
Interested applicants should email neil at metropolisjapan.com for details
+++ UPCOMING EVENTS
---------------- ICA Event - September 1st ----------------
Title: "Tokyo Bay Cruise ICA Summer Networking"
Details: Complete event details at:
Venue: Tokyo Takeshiba Terminal
Date: September 1st (Friday)
Cost*: ¥3,000 ICA members; ¥4,000 non-members. Special Offer on the
night; Join the ICA for ¥5,000 instead ¥10,000 annual fee, which is a
50% discount, and you pay and get in at the member rate!
RSVP: Tickets will be limited and you must register with the ICA by
August 29th by 5pm at the absolute latest as space is limited.
=> Concerning our piece in TT-907 about the North Korean regime
leveraging its ability to disrupt the 2020 Olympics.
*** Reader Says:
It is past time to start rattling Pyongyang's self-created cage. There
could well be negative consequences, such as a possible South Korean
recession and a trade war with China. But these negative results will
pale in comparison with the medium-term paradigm shift of the North
having ICBMs capable of blackmailing the US from providing its nuclear
umbrellas over South Korea and even Japan. Given a forced choice between
protecting Seoul or Seattle, the US could well back down. Pax Americana
would be further damaged, if not destroyed, in Northeast Asia. In such
case, Korea and Japan would likely soon develop their own nuclear weapons.
In other words, these may be the last months to bite the bullet before
this existential crisis festers beyond control. Specifically, the US and
the ROK must take the following new initiatives to serve notice, with
teeth, to the DPRK, China and Russia:
1. The Korean War is still not over. US Armed Forces treats Korea as
another Germany by bringing thousands of dependents to Korea, pretending
that the peninsula is no longer a war zone. In the past few decades, the
US Army has retrenched its forward bases north of Seoul to being largely
concentrated near Pyeongtaek to the south. It is time for the US
Government to announce and to begin removing non-essential personnel and
dependents from Korea. While this move would have a psychological and
economic chilling effect on South Korea, it would also send a clear
message to North Korea and its reluctant allies.
2. Next month's joint ROK-USFK annual training exercise should publicly
announce inclusion of training for a decapitation strike of the
Pyongyang leadership without aiming to remove the DPRK government.
3. Secondary sanctions should be unequivocally placed on any nation's
bank or enterprise that is directly or indirectly facilitating the
DPRK's weapons program.
4. Greater and continuous US and allies' naval and air forces need to be
deployed around North Korea.
+++ TRAVEL DESTINATIONS PICKS
=> Fukushimaya Tasting Market, Tokyo
Finger-licking organic food in Roppongi-Itchome
Fukushimaya Tasting Market is a supermarket in the heart of Tokyo where
you can find lots of delicious organic food. Here you can buy products
produced by farmers from all over Japan, ready-made deli dishes, and
organic goods for your home (for example, a shopping bag or bamboo
socks). Synthetic preservatives and synthetic coloring agents are not
used. Food items are also marked with Fukushimaya's safety standard marks.
=> Unadon Specialty Restaurant, Jimbocho
Great quality grilled eel at low prices
Although eel is usually considered an expensive cuisine, the good news
is that Unadondon, the first unadon specialty restaurant, has arrived in
Jimbocho, aiming to provide eel at a reasonable price. It is also the
first restaurant that specializes in making exclusively unadon
(marinated eel over a bowl of rice). With a more casual style comparing
with other restaurants that typically sell this dish, it is a great
place to go and enjoy their lunch offerings.
Based on your appetite, you can choose from unadon (¥500), unadon double
(¥980), prime unadon (¥1,500), and whole eel unadon (¥2,000). On the
10th of every month, they even have a special campaign, offering the
¥500 unadon at a "thank you price" of only ¥390, which makes a great
lunch deal. It is hard to deny that at these prices Unadondon offers a
really affordable way to experience this favourite grilled eel without
breaking the bank.
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+++ ABOUT US
Written by: Terrie Lloyd (terrie.lloyd at japaninc.com)
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