Amazon Bookselling
Bookselling in Japan
The following is a slightly modified version of a paper submitted by Siebert Neethling as an assignment for a Master's Degree course in International Business in 2009. The paper answered specific questions relating to a case study on the book industry in Japan and information is relevant to the case study as presented.
Integrative Case Study
BOOKOFF, AMAZON JAPAN, AND THE JAPANESE RETAIL BOOKSELLING INDUSTRY
Siebert Neethling
On a per capita basis, the Japanese book industry is approximately as big as that of the United Sates (Peng 2009, p. 387). It should be an attractive market for international business, yet there are unique features to the Japanese market that hold particular challenges for foreign companies.
1. The Profitability and Scale of large Japanese Retail Booksellers
The profitability of large Japanese retail booksellers is relatively poor, and their scale relatively small. There are a number of contributing factors, covering the full length of the value chain in the book trade.
There is very little competition in the area of book distribution, with two large wholesalers controlling more than 80% of the wholesale market (Miyamoto & Whittaker 2005, p. 11). Wholesalers and retailers operate a consignment sale system (Itaku Hanbai Seido). According to Altbach and Hoshino (1995, p. 493) new books are typically on consignment for 105 days, but long-term consignments can last for six months or even a year. This causes retailers to carry inefficiently-sized inventories, and is responsible for a great deal of over-supply. Japan also has a Resale Price Maintenance System (Saihanbai Kakaku Iji Seido). This price-fixing system prevents excess stock from being discounted.
The price maintenance system has the further, important impact of eliminating normal price competition. Large retailers are not able to compete on price to help increase sales and profitability through volume. This Saihan system has been successful in increasing the
The following is a slightly modified version of a paper submitted by Siebert Neethling as an assignment for a Master's Degree course in International Business in 2009. The paper answered specific questions relating to a case study on the book industry in Japan and information is relevant to the case study as presented.
Integrative Case Study
BOOKOFF, AMAZON JAPAN, AND THE JAPANESE RETAIL BOOKSELLING INDUSTRY
Siebert Neethling
On a per capita basis, the Japanese book industry is approximately as big as that of the United Sates (Peng 2009, p. 387). It should be an attractive market for international business, yet there are unique features to the Japanese market that hold particular challenges for foreign companies.
1. The Profitability and Scale of large Japanese Retail Booksellers
The profitability of large Japanese retail booksellers is relatively poor, and their scale relatively small. There are a number of contributing factors, covering the full length of the value chain in the book trade.
There is very little competition in the area of book distribution, with two large wholesalers controlling more than 80% of the wholesale market (Miyamoto & Whittaker 2005, p. 11). Wholesalers and retailers operate a consignment sale system (Itaku Hanbai Seido). According to Altbach and Hoshino (1995, p. 493) new books are typically on consignment for 105 days, but long-term consignments can last for six months or even a year. This causes retailers to carry inefficiently-sized inventories, and is responsible for a great deal of over-supply. Japan also has a Resale Price Maintenance System (Saihanbai Kakaku Iji Seido). This price-fixing system prevents excess stock from being discounted.
The price maintenance system has the further, important impact of eliminating normal price competition. Large retailers are not able to compete on price to help increase sales and profitability through volume. This Saihan system has been successful in increasing the