Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

Thematic (Sector/Industry)

<p>The following is a review of how physical retailers are progressing online and includes a unique ranking of the TOP 50 Online Retailers by sales, platforms sold on and growth.</p>
<p>Japanese retailers were famously behind peers in other markets to tackle e-commerce but many have caught up and become world class such as <a href="https://www.smartkarma.com/entities/fast-retailing-co-ltd" target="_blank" data-smartkarma-citation="entities:751:1" rel="noopener">Fast Retailing (9983 JP)</a> and <a href="https://www.smartkarma.com/entities/nitori-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:20386:1" rel="noopener">Nitori Holdings (9843 JP). </a></p>
<p>More worrying for those lagging behind such as <a href="https://www.smartkarma.com/entities/seven-i-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:1041:1" rel="noopener">Seven &amp; I Holdings (3382 JP)</a>, estimates suggest that online will have some role in 50% of purchasing transactions by 2025.</p>
<p>Despite retailers' efforts, the big three online malls, Amazon, Rakuten and Yahoo! Shopping still control half of the e-commerce market for merchandise.</p>

The following is a review of how physical retailers are progressing online and includes a unique ranking of the TOP 50 Online Retailers by sales, platforms sold on and growth.
Japanese retailers were famously behind peers in other markets to tackle e-commerce but many have caught up and become world class such as Fast Retailing (9983 JP) and Nitori Holdings (9843 JP). 
More worrying for those lagging behind such as Seven &amp; I Holdings (3382 JP), estimates suggest that online will have some role in 50% of purchasing transactions by 2025.
Despite retailers' efforts, the big three online malls, Amazon, Rakuten and Yahoo! Shopping still control half of the e-commerce market for merchandise.

Tip of the Iceberg: Omnichannel 50% of Japan Retail in 2025

<p>Penetration (the share of total retail sales) of e-commerce in Japan increased sharply in the past few years but still varies significantly by category.</p>
<p>The following insight looks at each consumer product category and how penetration has grown in the last few years and provides estimates of trends to 2025.</p>
<p>Even with these relatively cautious rates of growth, penetration rates are set to expand significantly in apparel, household &amp; interior, books &amp; media, and stationery but only retailers with form in successful online marketing will benefit from this with major negative implications for the many retailers that have failed to tackle the threat from online. This includes even major retailers like <a href="https://www.smartkarma.com/entities/seven-i-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:1041:1" rel="noopener">Seven &amp; I Holdings (3382 JP)</a> which lags behind <a href="https://www.smartkarma.com/entities/aeon-co-ltd" target="_blank" data-smartkarma-citation="entities:3:1" rel="noopener">Aeon Co Ltd (8267 JP), </a><a href="https://www.smartkarma.com/entities/rakuten-inc" target="_blank" data-smartkarma-citation="entities:31:1" rel="noopener">Rakuten Inc (4755 JP)</a><a href="https://www.smartkarma.com/entities/aeon-co-ltd" target="_blank" data-smartkarma-citation="entities:3:1" rel="noopener">  and </a><a href="https://www.smartkarma.com/entities/amazon-com-inc" target="_blank" data-smartkarma-citation="entities:409:1" rel="noopener">Amazon.com Inc (AMZN US)</a> in the race to lead the battle for leadership in online food retailing.</p>

Penetration (the share of total retail sales) of e-commerce in Japan increased sharply in the past few years but still varies significantly by category.
The following insight looks at each consumer product category and how penetration has grown in the last few years and provides estimates of trends to 2025.
Even with these relatively cautious rates of growth, penetration rates are set to expand significantly in apparel, household &amp; interior, books &amp; media, and stationery but only retailers with form in successful online marketing will benefit from this with major negative implications for the many retailers that have failed to tackle the threat from online. This includes even major retailers like Seven &amp; I Holdings (3382 JP) which lags behind Aeon Co Ltd (8267 JP), Rakuten Inc (4755 JP)  and Amazon.com Inc (AMZN US) in the race to lead the battle for leadership in online food retailing.

E-Commerce Penetration Increasing in All Retail Categories

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

<div>
<p><a href="https://www.smartkarma.com/entities/coupang" target="_blank" data-smartkarma-citation="entities:28425:1" rel="noopener">Coupang (CPNG US)</a> is the largest e-commerce platform in South Korea, according to Euromonitor. Coupang is best known for Rocket Delivery, which provides free, next-day delivery for orders placed any time of the day.</p>
<p>At the proposed IPO price range of $27-30 per share, Coupang will have a market cap of $46-51 billion. The IPO which comprises of a primary and secondary offering will raise total gross proceeds up to $3.6 billion.  At the mid-point of the IPO price range, the net proceeds from the primary raise are $2.8 million. </p>
</div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/coupang-ipo-initiation-delivering-the-goods" target="_blank" data-smartkarma-citation="insights:48125" rel="noopener">Coupang IPO Initiation: Delivering the Goods</a>, we opined that Coupang's fundamentals tick all the right boxes and worth a look, in our view. Coupang is a new-economy growth story and at the IPO price range, is attractively priced for its growth potential vs global e-commerce peers. Consequently, we would participate in the IPO. </p></div></div></div>


Coupang (CPNG US) is the largest e-commerce platform in South Korea, according to Euromonitor. Coupang is best known for Rocket Delivery, which provides free, next-day delivery for orders placed any time of the day.
At the proposed IPO price range of $27-30 per share, Coupang will have a market cap of $46-51 billion. The IPO which comprises of a primary and secondary offering will raise total gross proceeds up to $3.6 billion.  At the mid-point of the IPO price range, the net proceeds from the primary raise are $2.8 million. 
In Coupang IPO Initiation: Delivering the Goods, we opined that Coupang's fundamentals tick all the right boxes and worth a look, in our view. Coupang is a new-economy growth story and at the IPO price range, is attractively priced for its growth potential vs global e-commerce peers. Consequently, we would participate in the IPO. 

Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Bottom-Up

<p>Z Holdings has closed its long-awaited merger with LINE and will now step up to battle global Internet challengers. The new company will invest c. $5bn over five years to boost its AI heft to expand its market share in Japan as well as leverage LINE’s overseas footprint. Investors hoping for an upgrade to profitability targets may be disappointed as the FY23 operating income target is unchanged but the top-line targets are aggressive enough and an accelerated investment program is a compelling story.  That is good for Z Holdings and parent Softbank Corp but less so for its main domestic challenger Rakuten as the cost of business in Japan keeps going up.  </p>

Z Holdings has closed its long-awaited merger with LINE and will now step up to battle global Internet challengers. The new company will invest c. $5bn over five years to boost its AI heft to expand its market share in Japan as well as leverage LINE’s overseas footprint. Investors hoping for an upgrade to profitability targets may be disappointed as the FY23 operating income target is unchanged but the top-line targets are aggressive enough and an accelerated investment program is a compelling story.  That is good for Z Holdings and parent Softbank Corp but less so for its main domestic challenger Rakuten as the cost of business in Japan keeps going up.  

Z Holdings -  With Merger Close, Investment Will Accelerate

Internet Initiative Japan / Equity Bottom-Up

<p>IIJ has fired its salvo in the pricing wars with c. 10-40% reductions in consumer mobile plans although a shift in bundle sizes could minimize the impact as subscribers are upsold. Unsurprisingly, there are no sub 1GB plans since Rakuten is giving that away but the 2GB/¥780 plan is competitive (Rak: 1-3GB for ¥980) whilst IIJ is adding tiers higher than 12GB for the first time. On the aggregate, other businesses including Enterprise Mobile are generating sufficient growth that consumer mobile erosion is unlikely to have a material impact on consolidated numbers. Meanwhile, an impending announcement of mobile wholesale rates for FY20 is meaningful especially if costs are less than expected. </p>

IIJ has fired its salvo in the pricing wars with c. 10-40% reductions in consumer mobile plans although a shift in bundle sizes could minimize the impact as subscribers are upsold. Unsurprisingly, there are no sub 1GB plans since Rakuten is giving that away but the 2GB/¥780 plan is competitive (Rak: 1-3GB for ¥980) whilst IIJ is adding tiers higher than 12GB for the first time. On the aggregate, other businesses including Enterprise Mobile are generating sufficient growth that consumer mobile erosion is unlikely to have a material impact on consolidated numbers. Meanwhile, an impending announcement of mobile wholesale rates for FY20 is meaningful especially if costs are less than expected. 

Internet Initiative Japan - New Pricing Plans Are Competitive and Impact Is Manageable

Japan

Rakuten Group, Inc. provides Internet services. The Company offers Internet finance services which including "Rakuten Card" and "Rakuten Bank". Rakuten Group also provides digital content services including electronic book services.

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Rakuten (4755 JP)

Tip of the Iceberg: Omnichannel 50% of Japan Retail in 2025

We have compiled a unique ranking of the top 50 E-commerce retailers in Japan and provide an analysis of winners and losers among retailers now and...

Michael Causton

E-Commerce Penetration Increasing in All Retail Categories

A review of online market share in all key consumer categories in Japan, with forecasts for e-commerce market share to 2025 –the sharp growth will...

Michael Causton

Coupang IPO: Valuation Insights

The $27-30 price range implies gross proceeds up to $3.6 billion and values Coupang at $46-51 billion. At the price range, Coupang is attractively...

Arun George

Z Holdings - With Merger Close, Investment Will Accelerate

The biggest takeaway from the merger close is the ¥500bn investment program. If it fuels stronger revenue growth then profits should follow over...

Kirk Boodry

Internet Initiative Japan - New Pricing Plans Are Competitive and Impact Is Manageable

IIJ's new consumer mobile pricing plans are competitive with Rakuten and the financial impact on consolidated results should be immaterial

Kirk Boodry

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