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This in-depth guide to Japan explores the key trends in grocery retail and the growth strategies of the leading retailers in the country.

Get up to speed on all of the latest retailer results, the insight into what is driving growth and IGD's five big trends to watch in Asia in 2019.

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Rakuten has published its results for the first quarter, with Group revenue up 15.9% to JPY280,294m (US$2.5bn) compared with the same period last year.

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The Japan External Trade Organisation is offering small to medium-sized domestic retailers free access to global ecommerce platforms to help them sell products in 18 markets abroad.

Supporting smaller retailers grow online

The initiative is expected to increase trade for local businesses, maximising the global popularity of Japanese products around the world. Twenty four ecommerce operators, including Rakuten, Alibaba, JD.com, Red (Xiaohongshu), Lazada (in Singapore) and Ocado have signed up to take part in the program starting this summer. Some of these platforms are expected to setup a dedicated section to sell Japanese products under the program later this year.

Driving Japanese exports

For some smaller businesses, the program could offer their first export opportunity. The initiative eliminates the fee that would normally be required for sellers to list their products on third-party marketplaces. Following successful application, sellers will be asked to provide items chosen by the platform operator, who will negotiate and complete purchases.

 

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Chinese ecommerce giant JD.com is partnering with Rakuten on delivery in Japan. JD.com's drones will become a part of Rakuten's own unmanned delivery services.

JD.com's drones

JD.com has been developing and operating drones in China for a few years. It has been expanding in other Asian countries, such as Indonesia, where JD.com completed its first government approved drone flight. Its unmanned delivery vehicles also include driverless trucks.

Rakuten strengthening last-mile delivery

Since 2016, Rakuten has been offering drone delivery in Japan. It said that working with JD.com will “accelerate the development and commercialization” of its autonomous last-mile delivery efforts.

 

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As part of their strategic relationship, Walmart and Rakuten have opened their first ecommerce store in Japan. We look at the model being used and implications for future expansion.

Products fulfilled from US inventory

Earlier this year, Walmart and Tokyo-based Rakuten, announced a strategic alliance designed to optimise each company’s strengths and assets to expand their reach to new consumer groups. The Walmart Rakuten Ichiba Store is featured within Rakuten Ichiba, the largest ecommerce store in Japan. The new store provides Japanese consumers with access to products sourced from Walmart’s US ranges. Categories featured include clothing, outdoor goods and toys, with around 1,200 items initially offered. Orders are fulfilled in the US and flown to consumers in Japan. The product price incorporates shipping, duties and taxes.

New online grocery service

A key element of the strategic partnership was the development of a new online grocery delivery service, Rakuten Seiyu Netsuper. This launched in October, offering a more convenient shopping experience that meets the changing needs of customers in Japan. In addition to offering deliveries from Walmart’s stores, the service has established a dedicated fulfillment centre to increase capacity. Both these new services help Walmart to expand its grocery footprint in Japan, a country where its stores numbers have been relatively static for several years.

Adding new eBooks capability to the ecosystem

In addition, Walmart and Rakuten Kobo Inc. have formed an exclusive retail alliance that enables Walmart to sell eBooks and audiobooks and Rakuten Kobo eReaders, in Walmart stores and online at Walmart.com. As one of the country’s largest booksellers, a digital platform enhances its appeal, while also pitching it directly against Amazon and its Kindle e-reader.

A model for future international ecommerce expansion

Although Walmart has operated in Japan since 2002, the Walmart Rakuten Ichiba Store is a model which could be replicated in other countries where it does not have a physical presence. In Japan, Walmart benefits from an established customer base, but trades under the Seiyu brand. Physical stores are not essential to this model. Key elements are a strategic partnership with an ecommerce marketplace leader and a logistics infrastructure to support home delivery.

As orders are being fulfilled from the US, there is limited infrastructure development required in the new country of operation. With Walmart having high brand recognition globally and a reputation for price leadership, there is likely to be strong demand for its products. Walmart has established similar stores in China through its partnership with JD.com.

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Shoppers in 16 Japanese prefectures can now benefit from a new online grocery delivery service, Rakuten Seiyu Netsuper, launched by Walmart and Rakuten.

What is Rakuten Seiyu Netsuper?

The new platform is jointly operated by Seiyu (a subsidiary of Walmart) and Rakuten, and is a product of the strategic alliance between the two companies in January. It charges JPY432 (US$4) for home delivery, but shipping is free on orders over a certain amount. Users can select a delivery time within four days (including the purchase date). Rakuten Seiyu Netsuper has been trading as early as September 2018, moving it head-to-head with Amazon, which launched its own food and medicine delivery service in April 2017.

What is available?

Rakuten Seiyu Netsuper carries approx. 20,000 SKUs, including fresh produce, organics, grocery, personal care, baby, pet food, essentials, ready meals, and more. It offers deliveries from Seiyu stores as well as a dedicated Rakuten Seiyu Netsuper fulfilment centre in Kashiwa City, Chiba Prefecture. The platform aims to make use of Seiyu's expertise in fresh food and Rakuten in ecommerce. 

Connected to Rakuten ID

The new online grocery platform is linked to Rakuten’s ID system. This allows customers with a Rakuten ID to use their registered accounts to make purchases on the service, as well as accumulate and use Rakuten Super Points. Seiyu's Executive Officer, Tamae Takeda, said, "We will have access to Rakuten's strong base of 99m members. Rakuten's advantage is in technology, so we can combine our strengths [...]."

We've developed a single, universal methodology for calculating food and consumer goods retail data, supported by our programme of primary and secondary research. This makes Datacentre the most reliable and robust source available for data of this type. 

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