Why can't Japanese e-commerce companies break into the traditional food market?

Recently, the community group purchasing in the country triggered a heated debate, the opposing point of view that the Internet giants use the capital advantage to kill the traditional vendors in the community in the market, will be a threat to the original rely on the survival of the vegetable vendors, small traders.

Some people will also be compared with the Japanese brick-and-mortar stores and the competition between e-commerce, especially travelers who have been to Japan will find that Japan's brick-and-mortar stores are still very prosperous, so there is a view that Japan's brick-and-mortar stores beat the e-commerce.

There are some misunderstandings about Japanese e-commerce, and Japanese e-commerce is not as hot as it is in China, but it's not as bad.

First look at the data: Japan's e-commerce in the total sales accounted for about 6%, compared to China's more than 20%, it is indeed inferior to a lot; but if you look at the whole world, this figure is not low, Japan's e-commerce scale in the world ranked 4th, second only to the United States, the United Kingdom, and much higher than Germany, France and other developed countries.

And then from the point of view of the population utilization rate of e-commerce, Japan has 70 million people in use, China is 600 million, but the average of the total population to calculate, in fact, Japan's e-commerce penetration rate is higher than China.

In addition, the goods of this community group purchase, mainly food, vegetables, fruits and so on, the Japanese food e-commerce utilization rate of about 2.4%, China at about 2.6%, in fact, the difference is not big. While Germany, France and other developed countries, food e-commerce rate is as high as 5%, which may be related to working hours, Western European countries, food stores off early, people have to choose to buy food online, in Japan does not have this problem.

Compared to the competition from community group purchasing, the biggest crisis for traditional community food stores in Japan is the emergence of large stores, that is, the large commercial centers of the Mall model in Europe and the United States, which have impacted many small community stores and shopping streets.

Until 2000, Japan's Large Store Law restricted large commercial centers, mainly to protect these traditional "wife and husband stores". In the Koizumi era, the United States, the Clinton government strongly urged Japan to open up the domestic consumer market, allowing Wal-Mart and other large commercial centers to open stores in Japan, the Japanese government had to amend the "Large Shops Law", relaxing the restrictions on large commercial centers.

By now, Japan has also formed two major national supermarket chain series: one is the Aeon Group, and the other is Ito-Yokado. The greater threat to traditional vendors is the continued expansion of these large commercial centers.

Although the Japanese government has since amended the Big Shop Law to require, for example, that when a large commercial center opens, it needs to compensate the surrounding vendors or give them priority and preferential treatment, as people's consumption habits change, they are becoming more and more accustomed to spending money in shopping centers, which offer a variety of life experiences as well as meeting their shopping needs.

So in Japan, e-commerce is not the real enemy of small traders, large shopping centers and supermarket chains are.

On the flip side, can Japanese e-commerce use its capital advantage to enter the traditional food market like China's Internet giants?

The answer is no. Because Japan's laws and traditional distribution business habits limit the development of e-commerce in this area.

After the war, Japan established a very special agricultural sector organization "agricultural cooperative", referred to as "agricultural association", this organization and the early domestic supply and marketing cooperatives similar.

The agricultural cooperative not only holds the government's financial support, but also has a lot of privileges, such as fertilizers, pesticides, seeds and other scarce resources, farmers must be able to purchase through the agricultural cooperative. Accordingly, 100% of the crops grown by farmers, especially rice, had to be circulated through the Association until the ban was lifted in the last few years, and now rice in some counties and cities can be freely traded in the market, but the price is usually lower than that of the Association, and the same is true for other fruits and vegetables.

When agricultural products circulate through the Nonghyup, the purchase price will be more stable than the market price, which is due to the government's supportive policy for agricultural products, especially crops that are related to national food security.

Moreover, these practices are not restricted by Japan's Monopoly Law.

In addition, there is another very special feature of Japan's distribution structure, which is that basically all the distribution of agricultural products has to go through an intermediate wholesaler, i.e., a trading company.

What is the role of the trading company as an intermediary in the distribution process?

First of all, the trade association has strong capital, and a large number of stable product distribution channels, general agricultural products through the intermediary trade, small and medium-sized enterprises or farmers can obtain funds and stable channels. The two sides are in long-term cooperation and have signed an exclusivity agreement. If you try to skip the trading company and sell to a third party channel, it means you have to make up your mind to end the long-term cooperation with the trading company.

In Japan, the food processing industry in general, and small regional food processors in particular, do not have sufficient financial strength and marketing capabilities, and for risk considerations, they will not easily hand over their products to e-commerce for sale, as e-commerce is currently not popular enough in Japan to open up nationwide distribution channels for them.

Secondly, another major function of trading houses is to take risks. In the event of a food safety problem with a product sold to a supermarket through a trading company, the supermarket is the first person in charge, the trading company is the second person in charge, and of course the manufacturer will be held accountable in the end. But after the front of the supermarket and the trade association's gatekeeper, the formation of a complete response chain, can reduce the risk.

So in Japan, food safety, the middle of the distribution company actually plays a very important role in supervision and crisis management.

By the same token, supermarkets are also willing to have a relationship with manufacturers through trading companies because of the added insurance link in the middle. Because of the long-term formation of circulation habits, so that the final end of the consumer to form a cognitive, in the supermarket to buy things will be more at ease.

In this way, it is difficult for e-commerce to enter the field of fresh ingredients or food, and it is difficult to have the opportunity to purchase in large quantities. Therefore, at present, Japan's domestic food e-commerce, mainly manufacturers direct sales or mainly imported food.

So, China's community group buying this kind of e-commerce model, will it be popularized in Japan in the future?

For now, there is little hope.

Now Japan itself has figured out a model: the physical stores of medicine and food into the community. Because of the serious aging of Japanese society, nearly 1/3 of the elderly over 60 years old, this part of the people are not accustomed to shopping online, and their main needs are food and medicine, so many drugstores have opened stores in the community.

"Pharmacy + food" model is very hot in the past few years, especially the Aeon series of drugstores, this is very good. When we travel to Japan, we mainly go to attractions and commercial centers, so we may not see the "pharmacy + food" model, but in the suburbs and villages, the trend is growing, because this model is more relevant to the actual needs of the Japanese community than the e-commerce.

China's current social and demographic structure is still different from Japan's, and it is expected that China will have to figure out a model that suits the characteristics of its own communities, including how e-commerce should serve them.

Innovation and technological progress are welcome, but the key is how to minimize the impact on society in the process of applying them, how to give groups with damaged interests a chance to make a soft landing, and how to design a system that harmonizes technology and society.