Tsutaya .vs.

Rakuten
M-Commerce: Leveraging Retail Sales
through the Mobile Platform
May Su Aung msaung@iuj.ac.jp
Bryan Copeland bcpld@iuj.ac.jp

TSUTAYA: Profile
Corporate
Headquarters

Tokyo

Established

1983

Employees/TOL*

100

Subscribers/TOL*

18.55 million

Wireless
technology

i-Mode
Movie Mail, TOL (mobile)
LinkShare
Culture Convenience Club Ltd
(CCC includes Tsutaya and TOL)

Parent company
Net Sales: 3,043 million
Ordinary Income: 579 million
Net Income: 436 million

* TOL Tsutaya Online

** Estimated, year ended March-to-March, 2006 fiscal year; based on $1 = 132.06

(TOL - 1999)

Approach to Mobility
How does Tsutaya do it?
In 1994, CCC built a sizeable customer database
Maintain a dynamic, always-on picture of individual
entertainment tastes and preferences and personalize
product offerings by combining data with mobility via iMode service.
How does it all work for the consumer?

TOL*, Tsutayas wireless i-Mode site, email consumer whenever the

next release of the brand which consumer bought last time is
available (or notify about clearance sales)

*Case Study -- Tsutaya, a Tokyo Video Store, Goes Mobile:

http://www.cioinsight.com/c/a/Past-News/Case-Study-Tsutaya-a-Tokyo-Video-Store-Goes-Mobile/

Business Strategy
Store Development Strategy Bringing
the 3000-Store Vision to Reality
The market radius for its retail locations: a 10 minute
customer destination
They envision the potential to develop and open 3,000
stores in Japan by assuming that one TSUTAYA location
exists for every 40,000 citizens.

Enhanced IT to Support
Store Operations

The CCC has developed a number of information

technologies (IT)
To support operations, including the (AMS)
To analyze daily and hourly product movement at each store
To execute rental product orders at franchise headquarters
on behalf of franchisees.

The CCC connected all stores to franchise headquarters with

a knowledge-sharing system called TSUTAYA NAVI, an IT
platform for creating & sharing insights to support the
resolution of store operating concerns.

Clicks & Mortar (C & M)

To generate synergies between physical TSUTAYA in-store services

and the Internet entertainment portal (TOL).

Provide a Marketing function: TSUTAYA online, retail customers and

TSUTAYA stores are directly connected via Internet.

This connection, both pinpointed and immediate, provides a

marketing function that other companies do not possess.

Monthly Sales & Membership

Member Growth
(Customer Acquisition
Strategy)
60% of 19-year-olds in Japan are "active Tsutaya members

Market Share (FY2005)

Share % in parentheses: Unit billion yen

RAKUTEN Profile
Corporate
Headquarters

Roppongi Hills, Tokyo

Year founded

1997 (RA - 2003)

Employees/RA

200

Subscribers/RA

17.3 Million*

Wireless
technology

i-Mode (DoCoMo partnership)

EZWeb, Yahoo!
Rakuten Auctions, Portal shops

Parent company

Independent

Net Sales: 33,636 million **

Ordinary Income: 6,937 million **
Net Income: 3,731 million **

* ALL Raktuen Divisions

** ALL Rakuten Divisions; Estimated, year ended March-to-March, 2006 fiscal year; based on $1 = 132.06

Rakuten Mobile Strategy

Eyeing mobile auction market
Partnership with NTT DoCoMo on Rakuoku
Spin-off of Rakuten Auctions on the Mobile
DoCoMo has a 40% stake (4.2 billion )

Case Analysis Rakuten Ichiba: http://www.slideshare.net/icestorm/case-analysis-rakuten

Rakuten Mobile Storefront

Rakuten Financial Highlights

Travel Bookings via Mobile Phone

Rakuten Business Model

Rakuten Operating Margin

Rakuten Mobile Future

Pushing Rakuten Auctions on the Mobile
Tie-up talks with Tokyo Broadcasting Systems,
Inc. (TBS); Internet TV negotiations
M-commerce, focused on:

Recommendation technology
Captivating Contents
Product-placements
Ad Relevancy
Increased Auction traffic/sales