TOKYO -- The likes of Rakuten and Yahoo Japan are rethinking their approach of having merchants on their marketplaces handle product shipping, worrying that rate increases by logistics companies could give Amazon.com an advantage.
Merchants on the Yahoo! Shopping platform have surged to nearly 500,000, with much of the growth coming after the company eliminated fees needed to open online stores in 2013. But recent moves by major logistics companies to raise rates and restrict volumes pose obstacles to further expansion.
In a lecture here Friday, Yahoo Japan President Manabu Miyasaka expressed a desire to improve delivery efficiency and reduce costs. "One thing we can do is cut down on redeliveries," Miyasaka said.
E-commerce delivery management can be broadly divided into two models. In direct sales, site operators stock and sell products themselves. In the mall model used by Rakuten and Yahoo Japan, responsibility for arranging deliveries rests with individual sellers on the platform.
Though the latter may seem to insulate the mall operator against higher shipping rates, the impact can actually be harder than with direct sales. "If sellers pass on the rise in shipping costs directly, it'll look the same as a price hike to consumers," a major e-retailer said.
Amazon, which uses both models, has leveraged its extensive warehouse and distribution networks to more efficiently deliver orders, giving it more leeway to absorb higher delivery costs. The company also offers a popular program providing free delivery in exchange for an annual membership fee. These factors give Amazon an edge over Yahoo Japan and Rakuten in the face of shipping rate hikes.
Yahoo Japan and Rakuten are not sitting idly by, however. They are stepping up efforts to support merchants by taking on some responsibility for logistics management, including trying out some information-technology-based solutions.
The Lohaco shopping website, run by Yahoo Japan and office products retailer Askul, has buyers choose a narrow delivery time window. Lohaco then sends an alert via smartphone app when a package is about to arrive. Customers using the service miss deliveries just 2% of the time, compared with a reported 20% rate for parcel deliveries in general. Yahoo Japan also partnered with a startup to launch a cheaper bicycle-based delivery option for sellers last month.
Rakuten, meanwhile, is making use of brick-and-mortar facilities. In addition to delivery lockers and convenience stores, customers can now pick up their orders at automotive products retailers and other stores.
Online shopping site operators are also expected to take advantage of their troves of data on customer buying habits. Some e-commerce websites change fees and reward points based on the date or time of day in order to space out deliveries more evenly.
Japanese e-retailers have thus far relied on "cheap, high-quality delivery services you can only find in Japan," an industry insider said. With that assumption now coming into question, virtual mall operators will need to figure out how to adapt.