TOKYO -- It is a Japanese rainy-day ritual: When the first droplets fall, pedestrians dash into the nearest convenience store to pick up a plastic umbrella. These umbrellas are sold by the tens of millions every year, and untold numbers are left on trains, forgotten in pubs or otherwise tossed in the trash.
An up-and-coming startup wants to put a stop to this.
Last December, Nature Innovation Group launched an umbrella-sharing service. Customers simply register their credit card information through Line, one of Japan's most popular messaging apps. Then they can borrow an umbrella once for 70 yen ($0.66) or an unlimited number of times a month for 420 yen.
The service, called iKasa -- kasa means umbrella in Japanese -- now has a little over 350 umbrella ports and 5,000 umbrellas scattered around Tokyo and Fukuoka in places ranging from cinemas to subway stations, karaoke joints and office buildings. In eight months, the number of registered users has reached nearly 44,000.
"It is inexpensive and super convenient," said Ritsuki Nishimura, one of those users. "Buying plastic umbrellas is always troublesome. iKasa is really useful on days like this when it's raining on and off."
The service is yet another example of the ever-spreading sharing economy, which has expanded beyond high-priced items like cars and homes to humbler necessities like bicycles or even clothes. Nature Innovation also spotted an opportunity as companies and consumers come under pressure to reduce plastic consumption and waste. But despite its fast start, iKasa also faces skepticism over whether it can ever be a moneymaker.
Umbrella-sharing has been tried before -- more than 20 companies armed with millions of dollars in investment mushroomed across China in 2017, according to media reports. Many of them quickly folded.
Umbrellas can be unlocked with a dedicated app or with the Line messaging app at dispensing spots. (Photo by Yuki Kohara)
Nature Innovation thinks it has found the right formula. To unlock an umbrella, a customer must use a smartphone to scan a QR code on the handle. When the code is scanned, the user is also prompted to rate the previous borrower by answering whether the umbrella was left in good condition. If users accumulate too many negative reviews, they are suspended.
The umbrellas, which use internet of things technology, can be brought back to any port. The company claims the return rate is close to 100%.
Some big Japanese corporations believe the young venture is on to something. Lawson, a major convenience store chain, and JR East, the main railway operator in and around Tokyo, have struck up partnerships with the startup. In June, Nature Innovation raised 30 million yen from investors that included JR East's corporate venture capital arm.
"We plan to form partnerships with many companies and administrations to make umbrellas completely shareable and create a more efficient and eco-friendly future," said Shoji Marukawa, the startup's founder.
Ken Kurosu, director at Nature Innovation, added that "Lawson and other convenience stores recognize the importance of sustainable growth as well as the spread of the sharing economy."
"They have started to rethink selling plastic umbrellas," Kurosu said.
The umbrellas are unlocked by scanning a QR code. (Photo by Yuki Kohara)
According to the Japan Umbrella Promotion Association, 120 million to 130 million umbrellas are sold in the country annually. More than half are plastic. Just about every convenience store sells plastic umbrellas, with prices ranging from about 400 to 700 yen.
A global plastic waste crisis, however, is calling this and other practices into question. Japan is the world's second-largest producer of plastic rubbish per capita, after the U.S. Import bans by countries that once accepted and processed the waste, such as China, investor scrutiny and tighter international regulations are all pushing companies to cut down on plastics.
The iKasa umbrellas are produced in China to limit costs. They are made to be sturdier than their plastic counterparts, according to Kurosu, who said they should hold up for about two to three years. "We are in the process of producing another 3,000 umbrellas," he said, on top of the 5,000 the company already has.
The startup is also researching ways to make the umbrellas reusable. It is working with a materials company called TBM to explore replacing parts like the handle and frames with limex, a new material mainly made from limestone that is considered a plastic alternative.
Marukawa suggested iKasa is a cheap but powerful stress reliever for people and the environment alike. "Users won't have to go on an unnecessary shopping trip when it suddenly rains, and it will lead to fewer plastic umbrellas being thrown away," he said. "Our service offers people easy mobility and comfort, which in itself holds a certain value."
The question is whether that value will translate into profits.
Although Nature Innovation does not disclose its production expenses, it admits its umbrellas cost over 50 times more to make than plastic ones, which require about 15 to 17 yen apiece. Marukawa said the business "has not reached the break-even point yet." Kurosu conceded, "Honestly, the 70 yen service charge is currently compensating for our operating costs."
There is some hope. Nature Innovation also charges stores 980 yen a month for its umbrella ports, and it hopes to generate more revenue through advertising.
For 3 million yen, companies can place ads on 1,000 umbrellas. Fashion retailer Marui Group and film producer Toho have become clients, along with Tokyo's Ueno Zoo, whose star attraction -- a giant panda -- is illustrated on its umbrellas.
Umbrella-based marketing has a long history in Japan. During the Edo period in the 17th and 18th centuries, kimono seller Echigoya -- known today as the department store chain Mitsukoshi -- rented umbrellas with its logo as part of a promotion. "For consumers it was also a way to show off that they were Echigoya's clients," said a spokesperson for the company.
The startup also plans to launch its own smartphone app within the year, which would allow it to charge for in-app ads.
Big data collection could be Nature Innovation's biggest opportunity of all. Once the startup launches its own app, "Using GPS information, we will be able to see what routes people take and what stores they tend to go into when it rains," Kurosu said. "I am hoping we will be able to sell these kinds of data to stores and real estate developers."
Shoji Marukawa, CEO of Nature Innovation Group, expects convenience stores and other companies that want to reduce their plastic use will embrace iKasa. (Photo by Yuki Kohara)
But for now iKasa has a lot to prove.
Koichi Noguchi, partner at PwC Consulting, warned it is harder to build a sharing business centered on low-value items like bicycles and umbrellas, as borrowers might be less careful than they would be with something expensive like a car.
Noguchi does see demand for borrowing umbrellas and other "tiny things" frequently, suggesting the market holds promise. "However, not many rental services have advanced into this field because it is a difficult business with risks," he said. "The use of technology as well as careful business planning will be key."
China's experience, meanwhile, is a cautionary tale.
Lured by the success of on-demand services like Uber and Airbnb, Chinese entrepreneurs seized on the idea of sharing umbrellas and all sorts of other things. But many of the businesses vanished as quickly as they emerged, said Shaun Rein, a managing director of Shanghai consultancy China Market Research. Rein cited umbrella thieves as well as an unclear business model among the chief reasons for the failures.
"My guess is shared umbrellas in Japan will be plagued by broken pieces," he said.
Takuya Ichikawa, a sharing-economy expert at Daiwa Institute of Research Group, said success will depend on scale. "It will be important to have as many [umbrellas] as possible in highly populated places and have high-frequency usage."
At the same time, Ichikawa said: "Appealing to conscious generations like millennials and maintaining that user group will be important. One of the best things about the sharing economy is that it aims to provide solutions to social issues."
One thing iKasa cannot control, of course, is the weather. Marukawa, the founder, acknowledged that sales could fluctuate, especially in the winter when Japan tends to get little rain.
Nikkei staff writer Coco Liu in Hong Kong contributed to this story.
