BUSINESSWEEK ONLINE : DECEMBER 11, 2000 ISSUE
BUSINESS WEEK E.BIZ -- UPSTARTS Web Shopping in Shinjuku (int'l edition) An American price-comparison site offers help to harried Japanese shopaholics The Japanese have a reputation for being the world's pickiest consumers, obsessed with quality and presentation. A shopper will spend hours battling crowds to track down, say, 15 dainty regional treats in an ornate box wrapped in designer paper. Supermarkets cater to the discerning crowd by stocking perfectly marbled beef, while workers at electronics shops dust their floor models religiously. Then there's the other, less-known side to this obsession--price. Years of falling wages and rising unemployment have turned the Japanese into bargain hunters, even if they hate to admit it. While Japan's complex system of obligations hasn't changed, budgets have, and the Japanese go to great lengths to cut corners while preserving quality. DealTime Japan wants to feed those obsessions. On Oct. 24, the subsidiary of the 18-month-old U.S. price-comparison site launched its service in Japan. It says it can save consumers time and money--and the drudgery of having to lug home heavy bundles from overcrowded, poorly stocked stores. Japanese shoppers can search through nine categories on the Web site, including electronics, music, and food--some 200,000 products from 340 merchants. By mid-2001, DealTime plans to expand to 20 categories, including cosmetics and toys. Will enough shoppers show up? In Japan, cybershopping is just catching on, even though consumers elsewhere have been buying online for years. In 1999, Japanese consumers bought $1.8 billion worth of goods online, a tiny fraction of the $20 billion worth U.S. consumers snapped up, according to Forrester Research. And DealTime Japan faces competition from other Japanese price-comparison sites like Kakaku.com, EasySeek.com, and BargainNews.net. Then there's U.S.-based Priceline.com, which is expected to launch its name-your-own-price service in Japan sometime next year. Even should DealTime best its Japanese competition, it must still show that its business model will work. DealTime only provides prices and descriptions. There's no inventory or shipping. The company makes its money the Web way: It sells banner ads and charges retailers if they want their company logo placed next to their product listings. E-tailers pay DealTime Japan 95 cents each time a shopper clicks on one of its product listings, regardless of whether the visitor buys anything. But it's an as-yet-unproven business model in the U.S., since the parent company is not yet profitable. Analysts say a better approach would be to take a cut of each sale. ''The site is great for consumers, and it might turn a profit, but it will be hard to grow into a big company,'' says Internet analyst Luigi Limentani of Nikko Salomon Smith Barney Ltd. DealTime isn't worried. The company says it has better technology and big backers. Electronics maker Omron (OMTEY), Mitsui & Co. (MITSY), the country's largest trading house, and Credit Saison, a consumer-finance company, are behind the new venture, providing engineers, contacts, and marketing help. And DealTime says its software edge comes from its ability to sift through Web sites to automatically grab prices and product descriptions. Tetsu Yamada, president of DealTime Japan, says the combo of strong backers and sophisticated software makes his 35-person operation a player. Next year, he predicts, the company will do $5.5 million in revenue--on par with what rival Kakaku.com expects. Yamada says to boost profits, he plans to offer more services like tracking hard-to-find items. The key, says Yamada, is making comparison shopping simple. A team of DealTime employees scans the Net in search of new Web retailers. Once a site is found, the company's software grabs prices and product descriptions off the sites, adds them to DealTime's database, and continually monitors the sites for any changes. That frees DealTime from having to set up individual data feeds from each merchant or inputting the data manually, the way other comparison sites operate. Suppose a customer wants to price a new washer. They go to the home-electronics section, click on washing machines, and choose the brand. Next, they enter the upper and lower limit of what they're willing to spend. Another click, and up comes a list with the names of e-tailers, the models, and prices that fall within that range. The customer can then be whisked to the online shopkeeper's site to do the deal. Buyers also can check out consumer ratings of the products they're interested in buying. Convenience may be the big lure. Take Asami Kimura. In September, the 33-year-old housewife moved from one of Tokyo's satellite cities to Hanzomon, a stone's throw from the Imperial Palace. The central locale is fine for Asami's new husband, who commutes to a nearby office. But it's a nightmare for Asami, who must drive through narrow back streets in heavy traffic to shop for essentials and then haul them up to her fourth-floor apartment. She started using DealTime Japan this month to search for bargains and a better way to get food to her home. ''DealTime helps me find the cheapest way to get heavy bottles delivered to my door,'' says Asami. Pickled gifts. Shopping for the best price is only one part of the equation. Yamada, a Harvard MBA who is a former marketing director at Coca-Cola Japan, says Japanese consumers are just as interested in quality and selection--particularly around the end-of-year gift season. That's when Japanese give friends, family, and colleagues high-grade, elegantly wrapped pickled plums, roasted seaweed, and locally brewed beer. DealTime Japan even classifies searches by gifts, so shoppers can find such goodies as the Fuji San Set--five horse mackerel, three barracuda, and two mackerel, gutted and split--for $37.80. DealTime says the initial traffic is encouraging. Visitors are clicking on 12,000 pages per day, and they're spending twice as long--eight minutes--seeking bargains than U.S. shoppers. On Nov. 15, it launched a Web page for mobile-phone users, so shoppers can compare prices on the run. The question is, will Japanese just keep moving or stop long enough to shop? By KEN BELSON _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					e.biz Contents for Dec. 11, 2000 issue RELATED ITEMS Web Shopping in Shinjuku (int'l edition) TABLE: Shop Till You Drop INTERACT E-Mail to Business Week Online

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