E-commerce business, growing increasingly vital during the pandemic. What are the secrets to gaining fans and achieving success? (Part 2)

• E-commerce Business: Increasingly Vital in the Pandemic Era. What Are the Secrets to Growing Your Fan Base and Achieving Success? (Part 1)

The e-commerce market is booming like never before due to the impact of the novel coronavirus pandemic. Alongside small and medium-sized enterprises (SMEs) that have been engaged in e-commerce for some time, major manufacturers that have primarily operated offline are also increasingly entering the space. That said, the e-commerce world isn't as simple as "just enter and start selling." Companies are currently experimenting from various angles to strengthen customer engagement and increase LTV (Lifetime Value).

This time, we shine a spotlight on this rapidly evolving e-commerce landscape, thoroughly dissecting "the latest e-commerce trends and keys to success." We speak with Junichi Kato and Natsuki Nishina from CARTA COMMUNICATIONS Inc., a leading digital marketing company in Japan. Both are part of a team supporting companies entering or strengthening their e-commerce presence and possess extensive insights. They share essential points that anyone involved in e-commerce business should know. In this second part of the interview, we delve into the mindset and specific methods required for successfully operating a business online.

What are the common pitfalls for "newcomers to e-commerce"?

Q. As an effect of the pandemic, manufacturers have started entering e-commerce. Does that mean CARTA COMMUNICATIONS is seeing an increase in consultations from these "new entrants to e-commerce"?

Kato: Yes. We're seeing more inquiries from companies that were purely offline businesses but now want to expand online due to the pandemic. Starting online isn't as simple as it sounds; depending on your perspective, it can be seen as "launching another business identical to what you're currently running." Even when they try, we often see cases where the company lacks the resources, the organizational structure can't handle it, or they end up not fully executing what needs to be done. That's precisely why there's so much we can offer.

Q. In that sense, I imagine there are also more client companies unfamiliar with e-commerce. If such companies have "misconceptions," what might those points be?

Nishi: It's hard to say, but surprisingly often, we see cases where they think, "If we're selling offline, we should sell online too," or "We have this much market share offline, so we should sell online. Why aren't we selling?" This tendency seems particularly strong among large manufacturers. However, in e-commerce, there's always been a trend where "the harder something is to get offline, the more likely people are to buy it online." So, simply doing e-commerce doesn't guarantee sales.

Conversely, small and medium-sized businesses that have consistently grown their sales through e-commerce seem to possess a stronger mindset: "We have to challenge ourselves this much." It's about whether they can thoroughly commit to the efforts needed to become well-known within the e-commerce world. Offline has limitations like "shelf space," but online has none. Becoming famous or ranking high on marketplaces requires different efforts than offline.

For instance, are you actively working to get customers to write reviews? Simply listing products won't naturally generate reviews. How do you encourage customers to write reviews and rate your products? I place immense importance on reviews, believing "everything is hidden within them." First, build a relationship where customers feel comfortable leaving reviews. Then, make a genuine effort to respond appropriately to those reviews. This relationship is entirely one-on-one and very human. In fact, online, it's even more crucial to sincerely listen to each customer's voice and respond with meticulous care.

Kato: What I feel strongly about for clients pursuing e-commerce is this very fundamental point: I want them to truly understand the concept of "return on investment." E-commerce isn't about launching online and seeing sales skyrocket from the first month. Customer lifetime value (LTV), including repeat purchase rates, remains crucial. The structure of gradually lowering customer acquisition costs while recouping investment through repeat purchases hasn't changed since the beginning. Misjudging this fundamental aspect risks fundamentally mismanaging the business itself.

What know-how have you gained by becoming an "e-commerce operator" yourselves?

Q. I understand your team actively runs an e-commerce business to accumulate expertise for supporting other e-commerce operators. What exactly does this involve?

Kato: We partnered with a pharmaceutical manufacturer to launch "HAUT," a men's skincare brand, and distribute the products via e-commerce. We did this with the intention of truly experiencing the "operator's perspective" ourselves to grasp the ideal form of e-commerce support services. Once we actually became the operators running an e-commerce business, we really understood how tough it is (laughs).

When people think of "e-commerce support," they often focus on design and promotion aspects like creating a nice website or managing ads. But as I mentioned in Part 1, the truly crucial aspects of e-commerce lie in logistics, inventory management, customer support—essentially, ensuring customers receive products stress-free, feel delighted, and become repeat buyers. In other words, without supporting these areas, achieving genuine sales growth through e-commerce might be impossible. That was the major insight I gained by becoming an e-commerce operator myself.

Another realization was the sense that "if you remain confined solely to e-commerce, you'll eventually hit a wall." Digital strategies alone simply can't capture all the awareness needed. Even if you run Instagram ads forever, your CPA (Cost Per Acquisition) will eventually skyrocket. At that point, how effectively you can leverage offline expansion becomes crucial. This, too, was an important discovery that came from "doing it myself."

Supporting everything from D2C Inc. brand launch to e-commerce operations

Q. Based on that firsthand experience as practitioners, the service you offer is "Commerce Container," correct? Finally, could you briefly outline this service? You describe it as a "one-stop service for e-commerce support." What specific solutions does it provide?

Kato: Yes. This service supports everything from opening stores on Japan's three major malls—Amazon, Rakuten, and Yahoo! Shopping—to expanding e-commerce on owned websites.

For clients wanting to open a store on a mall, we provide comprehensive support: developing sales promotion strategies tailored to each mall, analyzing the target market and competitors, creating the site, implementing SEO measures, and increasing traffic through advertising campaigns. A key focus when launching on malls is executing initiatives to boost sales during each mall's "sales" events, leveraging that momentum to elevate performance during regular periods.

Regarding the three major malls: For Amazon, for example, rankings and reviews are crucial, so we implement strategies focused on these. For Rakuten, we can execute advertising campaigns where manufacturers support stores on Rakuten to boost their own product sales. For Yahoo! Shopping, we hold "Yahoo! Commerce Partner Certification," enabling us to handle store setup entirely, including product sourcing.

For clients wanting to launch e-commerce on their own website, we provide support using Shopify. As the world's largest e-commerce platform, we are certified as a "Shopify Plus Partner," meaning we are highly proficient in its use and can maximize its features for your launch.

Recently, utilizing Instagram's shopping features (Instagram Shop Now) has also become increasingly popular. In this case, we can provide support from setup to operation, including integrated efforts with social media account management.

Our "Commerce Container" service provides this end-to-end support from launch to operation. However, we're also starting initiatives where we collaborate with client companies from the very launch of their D2C Inc. brand, supporting them throughout the e-commerce operation. In such cases, while strategy development is essential, the fulfillment domain becomes particularly critical. Fulfillment generally refers to "all operations required from the moment an item is ordered online until it reaches the end user." Specifically, this encompasses logistics and shipping, order management, inventory management, and customer support. We provide services that include this entire fulfillment domain.

Q. I see. If you can offer such a comprehensive, full-package service, it seems like exactly the kind of solution you'd want to focus on expanding right now. Are you actively promoting "Commerce Container" yourselves?

Kato: Yes, we actively propose it to various client companies. For example, OEM companies in the apparel industry often have the need to "create and sell their own brand," and we're seeing an increase in inquiries from such clients. Many have strong capabilities in manufacturing products but aren't as skilled at launching and developing them as a "brand." That's where we believe our solution can be particularly valuable.

Nishi: One of our strengths is our deep relationships with media companies, stemming from our background selling advertising products for web-based media. Recently, we've even been consulted by media companies themselves. For instance, they're exploring ways to leverage their soft content and know-how—like running "writer workshops"—to expand into e-commerce. Collaborating on product development like this is another area we're actively pursuing.

CARTA COMMUNICATIONS is a highly flexible company, one that even dares to take on the challenge of becoming an e-commerce operator itself. Therefore, we can think and act outside the box, considering and implementing any strategy in any domain, all aimed at the goal of "increasing e-commerce sales." While many companies tout "e-commerce support," I believe this flexibility and breadth of approach is precisely what makes us unique.

The point that success in e-commerce hinges on how well you can imagine a "one-to-one relationship" with customers and respond to their individual needs ("N=1") strikes at the heart of e-commerce's essence. In other words, the essence of e-commerce is "direct business with customers." It's about building satisfying relationships with each individual, starting from the moment the product arrives and continuing beyond. It's the accumulation of these interactions.

Conversely, this also means taking direct control of the "direct touchpoints" previously managed by distributors or other third parties. In fact, it could be seen as an opportunity to achieve what was previously impossible. Whether you're just starting your e-commerce journey or already engaged in it, why not revisit the fundamental question: "Are we truly meeting the needs of each individual customer?" and reassess your current approach.