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Japan|ZOZO Drama Unfolds, How Will Things Turn Out?

Jan 28, 2019.Ichiro KumegawaTokyo, JP
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Photographer: YASUNARI KIKUMA

Since 2017 until the end of 2018, it seems that the dialogue back and forth between top fashion apparel companies and ecommerce officials went something like this:
"What is our company’s EC current sales ratio?"
“Seems to be about 20%."
"How are we doing at ZOZO?"
"We’re at about 70%."
"Can we do something about that? Say, make it 50:50 within 3 years."
“Understood, we’ll try our best."
"‘Trying’ isn’t enough, we have to make it happen. How much has ZOZO earned?"
"About 30% of the sales."
"Not to mention the costs for the pages.”
"Right."
"That’s almost 40% making it no different than the department stores in the city. The constant sales are making it difficult to profit. At this rate we’re not earning at all."
"Well..."
"I want to see results within 3 years. 50:50 are we clear?"
"Y-Yes. "

Anyhow, top fashion and apparel businesses are desperately trying to strengthen their e-commerce strategy and are constantly lamenting the status-quo ZOZO has withheld. However ZOZO is still an impenetrable fortress. Spending money in creating contents while all the while doing campaigns and promotions still proves difficult when you have to face the all-star cast at ZOZOTOWN as your competitor. Just as people are gnashing their teeths, ZOZO’s president Yusaku Maezawa’s success and extravagant lifestyle such as purchasing Jean-Michel Basquiat’s painting costing between 12.2 billion yen, his relationship with actress Ayame Goriki, the lunar trip project with Elon Musk has become the envy of many. In Japan, celebrities or wealthy individuals sharing their private lives openly are most of the time frowned upon. Thus Maezawa is a character to be reckoned with in the fashion world, however the brands that sell well under ZOZO are in fact, not profiting.

ZOZOTOWN launched a new fee-based membership service called "ARIGATO" at the end of last year. To put it simply, members who pay a fee can enjoy a 10% discount on all items and all the while, the fees are donated to a designated charity group by the consumer’s choice at ZOZO. This membership service is becoming a new contradiction between ZOZO and retail brands. Since the launch of ARIGATO, Japanese clothing giant Onward Kashiyama has completely withdrawn from ZOZOTOWN at the end of last year. Children's wear brand, Mikihouse and jewelry company 4°C Holdings also announced their withdrawal. It’s estimated that the launch of ARIGATO will become the reason for brands to pack their bags from ZOZO. Some opponents' views are: "The general products on the market are all uniform prices. Although ZOZO is responsible for the 10% discount, this will become a double price and the value of the goods will be damaged." In addition, the pre-announcement of the service was too urgent and brands did not have the time to prepare resulting in a negative view on President Maezawa. This seems to be a big turnabout in e-commerce. The split between ZOZO supporters and haters will result in an interesting drama.

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