Interesting article in The Times (archived below) talking about a fast-growing social commerce trend in Japan – Mainichi Tokubai (‘Everyday Deal’) – location-based supermarket deal directories, with content crowdsourced by price-sensitive consumers (who often receive a small fee for their contributions). It’s a crowdsourced creative combination of Groupon and JustBoughtIt.
For example, 7700 supermarkets in Japan are regularly scrutinised by 25,000 “regional correspondents” for the popular Mainichi Tokubai mobile website, http://www.navit-tokubai.jp/. The regional correspondents scan local newspapers, flyers and other sources for special offers and coupons, and upload them before ten o’clock each morning – ready for the shopping day.
The Times article takes a somewhat contrived angle – suggesting that the “catastrophic success” of Mainichi Tokubai is having a deflationary effect on the Japanese economy, as consumers coalesce ‘against’ big retailers.
But is there not an opportunity for brands here? Specifically, could brands offer Mainichi Tokubai services for consumers to share retailer deals – for their own brands, or for accessories and parallel categories. For example, Nike could set up a Mainichi Tokubai service for local health clubs, Sony could set up a Mainichi Tokuba site of deals / coupons from their retail partners, as could P&G, Unilever and the Reckitt’s of this world.
And for 2nd generation Tuangou (group buy) sites such as Groupon (with it’s new iPhone app and new heavy-hitting CEO, Rob Solomon), LivingSocial, SyncFu and Pikaba, Mainichi Tokubai services might boost their value proposition and help them avoid the dead-pool fate of 1st generation Tuangou sites - Mercata, Mobshop, actBIG, LetsBuyIt etc…(post-mortem presentation on 1st gen. Tuangou sites here).
If marketing is about solving people’s problems at a profit – could Mainichi Tokubai services from your favorite brands be a social commerce solution that helps build brands? Social media with a practical purpose…
Web-savvy housewives sabotage efforts to save Japan’s economy from stagnation
Leo Lewis, Asia Business Correspondent
Japan’s desperate fight with deflation — the policy battle that could decide the fate of the world’s second-largest economy — is being undermined by a mobile phone application and an army of penny-pinching housewives.
Supermarket managers across the country describe themselves as powerless to resist the new downward pressure on prices because their once-loyal shoppers have harnessed the full power of social networking to get ten yen (7p) knocked off a litre of milk.
More than 7,700 supermarkets in Japan are now scrutinised by the 25,000 “regional correspondents” for the Mainichi Tokubai mobile website. No special offer, no matter how small, escapes their gaze and the agglomerated information has become a devastating weapon for the hundreds of thousands of users of the site.
Armed with the daily-updated database, shoppers have focused their buying attention on the cheapest products on offer that day, with an intensity that never existed before.
More disruptive, however, has been the effect on retailers, which know that shoppers are watching the website like hawks and which drop their prices to compete with the lowest price on offer in that region.
Despite the best efforts of successive governments, Japan continues to suffer from the scourge of falling prices. The need to get rid of deflation was described by Yukio Hatoyama, the Prime Minister, last week as the most serious issue confronting the country. The next most serious issue he identified was averting a fiscal crisis.
The Japanese policy response has focused on fighting the problem with macroeconomic tools. Lowering interest rates to nearly zero and massively extending the funds available to banks via emergency loan programmes are among responses that have failed to arrest the problem.
This is partly because the problem persists at a grassroots level, and a large part of this, say analysts, is down to the extraordinary capacity of the Japanese household — in effect, the Japanese housewife — to shave their budgets.
Retailers have had little choice but to respond to that, knowing that average wages in Japan are virtually stagnant and have been so for years.
On this naturally deflationary scene has arrived Mainichi Tokubai — a website set up only as an experiment several years ago but one that has, since the dark days of the global financial crisis, achieved the critical mass of users to become a serious deflationary force. The catastrophic success of Mainichi Tokubai rests on the zeal of its correspondents and the fear they cause among supermarket managers.
The correspondents are paid a small fee per piece of “useful” information that they cull from local newspapers, flyers and other sources and upload before 10am each day — the hour that many Japanese housewives begin their daily shop.
Supermarkets have protested against the site, which they believe is artificially engendering a destructive price war. Mainichi Tokubai users see it as revenge and a legitimate weapon of “infowar”.
Economists believe that Japan’s war with inflation will be long and unpleasant. Richard Jerram, chief Japan economist for Macquarie Securities, said that it was easy to see it taking between five and ten years to achieve price stability unless policy changes.
He added that the Bank of Japan appeared to have a two-pronged strategy for ending deflation. “Plan A,” he said, “is to do nothing and wait until the output gap closes and ends deflationary pressure. This is likely to take a long time under current policy settings. Plan B is to hope that Plan A works.”
Doomed to deflation
- Japan’s Nikkei stock market index rose by 275 per cent in the 1980s before peaking in 1989, while property prices became so inflated that the tiny spit of land around the Imperial Palace in Tokyo was briefly worth more than the entire state of California
- When the bubble finally burst in late 1989, the values of both shares and property crashed spectacularly. The Nikkei fell 63 per cent from its peak over the next three years
- Property values fell by between 3 per cent and 6 per cent for eight consecutive years in the 1990s, putting enormous pressure on Japanese banks, which had made loans based on wildly inflated valuations
- Japan’s central bank kept interest rates abnormally high, which put the economy into a deflationary spiral
- In 1995, Japan started moving to a policy of keeping interest rates near zero. It had been fully implemented by 1999, but the economic damage had been done, with falling prices discouraging investment and hiring, and consumers hoarding their cash for fear of what the future held.