Terrie's Take 910 - Food Delivery Wars in Japan - Who Will Win? E-biz news in Japan.

Terrie's Take 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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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

[...Article continues]

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 
only JPY41,000:


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/


+++ NEWS

- 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 
17, 2017)


=> 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.


------------- Office Admin Position Open ------------------

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


---------------- 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.



=> 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.

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

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