Postmates’ Expansion to Japan: Market Audit and Competitive Market Analysis
Postmates is an on-demand good delivery platform that has a presence in more than 100 town and areas in the U.S.A. It enables people to get anything from local stores delivered in their doorsteps for a small fee. The model used by Postmates is similar to that of Uber but instead of using taxis, Postmates enables people to get goods from local stores using many other methods. Similarly, the company makes use of the rich human courier network in the delivery of goods. The company makes use of mobile devices and GPS to make sure that they match the demand and supply and within the shortest time possible. This means that most of the things done by the company are virtual with some of the employees working full time or part time. Entering the Japanese market will allow the company to grow regarding size and revenue. Japan as an island nation has a large part of the population using technology, which provides Postmates with an opportunity to becoming a leading player in that field. Its business model is one of the strengths that the company can use to be able to expand to Japan.
The product
As stated earlier, Postmates is a logistics company that delivers on-demand products to customers in a certain area from the local stores within a short time. Despite the fact that Japan has other logistics companies, most of them are transport companies and parcel delivery companies, which may take some time for the delivery of a product. Similarly, most of the logistic companies in Japan are more expensive compared to Postmates regarding delivery. This provides Postmates with an opportunity to have a competitive advantage over the other companies.
Regarding compatibility, Postmates will use the existing information that people have on the delivery of the products. For instance, the company has had delivery services offered by companies such as DHL, Yamato Transport, Sagawa Express and Nippon Express. These companies have been using technology in their service delivery, which puts Postmates in a better position to win the hearts of the people. The working procedure used by Postmates is not complex at all. It is just an extension of what has been happening in Japan with other logistic companies. The only thing that is different is the fact that Postmates will ensure that there are many outlets within Japan especially in the major towns and the most populated areas. Instead of using vehicles in many instances, the company will make use of human couriers in the delivery of the products. Similarly, the company will liaise with the existing retail outlets in the country. Baby boomers make the largest part of the population in Japan, which makes it easier for the logistic companies to succeed. Their preference for online shopping has been on the rise in the recent past, which acts as an opportunity for Postmates to succeed in Japan. Observability comes regarding the results of using the idea. The people save on time, the cost of fuel, as well as the traffic havoc when they go shopping (Xue-Jie, 2007).
Challenges
Japan is a nation where the citizens are loyal to Japanese companies. The policies within Japan in the past have been supportive of Japanese companies. This means that it is a bit of a challenge for companies in America to enter the Japanese market. However, Japan having a good business relation with the U.S.A. means that Postmates will have some levies regarding tax when it expands to Japan.
The market
Logistics centers in Japan are in Tokyo, Nagoya, and Osaka. This means that the most of the competing companies operate from these areas. However, the company’s business model allows it to have operations in the whole of Japan. In the U.S.A., Postmates operates in 100 locations. This means that it covers most of the areas in the country. Infrastructure in Japan is one of the developed in the world. This makes it easy for logistics companies to operate with ease. Similarly, the human courier used by Postmates operates within small distances, which means that infrastructure is not an issue when it comes to Postmates.
Consumer buying habits
As stated earlier, the number of baby boomers in the country is increasing. Similarly, a large part of the population in Japan is educated and aware of how technology can be used in shopping. Most of the business prospect argues that the country will continue experiencing an upward trend in online sales because of the biggest population size of baby boomers. The country also expects a higher ratio of e-commerce users with the age of 70 years and above. Similarly, since Japan has some large population, the number of people using the online shopping platforms will increase in future. This will increase the customer base of the company (Handfield, Straube, Pfohl & Wieland, 2013).
On distribution, the company will liaise with retail shops in the country and offer the services of delivering the goods to the customers. Moreover, the company will hire a large number of people both on a full-time basis and on a part-time basis. All the products offered for sale by the retail shops will be subject to delivery. The average price of the delivery will be $40 just as it is the case in the U.S.A. (Xue-Jie, 2007).
The distribution of the product will mostly be done by a partnership with retail outlets and opening new outlets that will enhance penetration to all areas up to an individual level. The firm will invest heavily in advertisement and promotion. With technology, the firm will invest in social media to create awareness of the existence of the firm. The use of e-marketing and e-business is to be used in promoting the firm. The firm will also use off-line means to create awareness. By use of trade magazines / journals, this may prove to be an easy way to reach the target audience. Trade Fairs/Exhibitions may be used to target audience. Word of mouth works well: to get a top exporter from the area to start using the product and the news will circulate to the market intelligence channels quickly. Having a good relationship with the local and international carriers will also promote the firm. The use of the freight quote calculator web app probably will attract many users (Xue-Jie, 2007).
On the pricing strategy, the firm will make sure its retail outlet is well distributed within the targeted areas. This will ensure that the distance to be covered is minimized, thus reduction of cost. Besides, the firm will make sure that the rate of charging is on the lower side compared to the competitors, after putting into consideration the weight, height, width and distance to be covered. The firm’s brand name is Postmates while some of our competitor’s brands name includes Nippon Express, Yamato transport, Kintetsu world express, Sagawa Express. The competitors names have an added advantage since their names are more local compared to our firm’s name (Czinkota & Kotabe, 2000).
Our competitor’s main feature is that they are using van couriers compared to our firm, which will be using a human courier, bicycle, motorbike, and van couriers. Our firm will be dealing with all products as long as the legal. It will also be providing storage space for our customers at a small fee. Most of the competitors are using online and off-line means in promoting their companies. The use of the web and social media like Facebook, company website, e-marketing is common. The use of Magazines, banners, poster, exhibition, they are also common. The competitors tend to use joint delivery capacities and truck to channel the products to their customers (Cunningham & Froschl, 2013).
The domestic market size grew at 105.5% of the size of the previous fiscal year. This is an estimated 1.1 billion yen per firm (Xue-Jie, 2007). This was related to the demands for consumption tax increase, full recovery from the Great East Japan Earthquake, and rising demands for cold foods. The estimated market growth within the first year of our firm is $30,000,000. The distribution system of Japan is very complex. The government of Japan tightly regulates the distribution system. The competitors who make deliveries to the same business use joint distribution by use of joint delivery capacities and trucks (Cunningham & Froschl, 2013).
Executive summary
Entering into Japan is a good move for the company. This is because the business model is compatible with that of the Japanese market. Moreover, the company stands a chance to benefit from the baby boomers in the country who have increased their tendencies to shop online. Consequently, the country is strategic in the way that it does business and the ways that the islands are situated with most of the islands having a major town. This means that each town will be a major operating center for the company. The other opportunity relates to the fact that the company will employ many people from the local scene. This means that it stands a chance of marketing itself with the word of mouth as the employees continue the day-to-day work.
References
Cunningham, P., & Froschl, F. (2013). Electronic Business Revolution: Opportunities and Challenges In The 21st Century. Springer Science & Business Media.
Czinkota, M. R., & Kotabe, M. (2000). Entering the Japanese Market: A Reassessment of Foreign Firms’ Entry and Distribution Strategies. Industrial Marketing Management, 29(6), 483-491.
Handfield, R., Straube, F., Pfohl, H. C., & Wieland, A. (2013). Embracing Global Logistics Complexity to Drive Market Advantage. DVV Media Group Gmbh, BVL International.
Xue-Jie, B. A. I. (2007). Characteristics Of and Lessons from Japanese Logistics Policies [J]. Contemporary Economy of Japan, 3, 008.
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