Amazon's Subscribe and Save Program now in Japan

Amazon's Subscribe and Save program is now operating in Japan. For that don't know what it is, it is a shopping subscription whereby certain consumable items can be purchased at a discount if the buyer "subscribes" to a scheduled delivery of the item, once every month to every 6 months. This is really quite a novel concept in that shoppers can now subscribe to receiving their regularly purchased items much like a cable subscription, and have them delivered at regular intervals. The benefits include free shipping to your door and not having to think about shopping for the items.

Currently in Japan, most people use Coop to order their consumables, a large company that delivers fresh food and other items on a subscription basis. You order your items from a magazine and fill in how many of each item you want on an order sheet and leave it outside your front door. Each week, your ordered items come to you and are left outside your door in a locked box packed with dry ice that only you have the key to. 

But this new program from Amazon will be a real threat to traditional Japanese businesses that work like Coop, and certainly to traditional grocery retailers as well such as Daiei. To top it all off, Amazon's prices in Japan are rock bottom for some items. Gillette Mach 3 razor blades for example can be found in most drug stores for around 1,500 yen (pack of 8). You have to search far and wide to get the blades for 1,350 yen. Amazon is currently offering the same blades for 1,190 yen, and if you have a Prime membership (a mere 3,900 yen a year), next day shipping is free. The blades are 1,072 yen with the subscription to  the Subscribe and Save Program, which is free and can be stopped or modified at any time.

It will take some time for such a subscription concept to catch on in Japan, particularly for consumable food items, as Japanese customers are very slow to adopt new ways of thinking. But as more and more people see the benefits of this, Amazon will continue to grow and solidify its hold on the Japanese online market. 

When Amazon has your product in its sights

How does Amazon.com (or Amazon.ca or .jp or whatever country you sell in) decide on which products to start selling itself? How do you know when your product is about to be taken over by Amazon? In addition to Amazon itself sourcing new products from Trade fairs (some from even across the ocean; eg. Tokyo Gift Show), Amazon has, courtesy of its sellers, a vast repository of products to choose from, and is well aware of which products sell well. Amazon’s targeting of products appears to follow a 3 step process.

 

When Amazon decides to start selling your product: 

 

1. Under the “more buying choices” link, Amazon will now be one of the sellers. But their price may well be significantly higher than yours. And if you move your mouse over the “add to cart” button, it will say “not in stock” or “in stock, ships in 1-3 months.” This message will remain so for a period of 1-3 months or more. It is at this stage where Amazon has decided to sell your product. They are likely during this time making contact with the manufacturer, finding out about shipping costs, etc. and trying to secure small quantities of the product for stage 2-the test sales stage. You will retain the buy box during this stage, even if their price is lower (remember, they are a service oriented company and dont want to make their customers wait).

 

2. The second stage is test sales. This will take place when the  products are now in stock by Amazon to sell on its own. Amazon’s stocks will be small, between 3-10 pieces (move your mouse over the “add to cart” button and you will see how many pieces Amazon has). Now Amazon will take the buy box even if your price is lower. Once they sell out, the product will once again be at stage 1 and you will get the buy box back. After 1-2 weeks, Amazon will again have a small quantity in stock and will once again start selling and retain the buy box. This cycle repeats itself 3-5 times. This stage, Amazon is doing 2 things. (a) confirming that the product consistently sells in their hands b) confirming what you and the other sellers will do about Amazon’s encroachment. If you do nothing, Amazon will have a good idea of whether the product will be more profitable being sold by them or by you.

 

3. The third stage is full blown sales by Amazon of your product, with ample stock held by the company (hovering over the “add to cart” button now does not give a specific number since that number is larger than 20. Do a test purchase of 100, 200,500,1000 pieces and stop just before purchasing and if it looks like the order will go through, you know they have a lot of stock. Time to find other products!

 

It is unclear whether aggressively lowering prices at stage 1 or 2 will dissuade Amazon from progressing to stage 3 and most sellers would not try it anyway!

Amazon USA banking requirements

When applying for an Amazon.com (USA) account, you will need a bank account from one of the following countries:
You can enter a bank account located in the U.S., U.K., or any country in the eurozone (Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain).

Amazon USA's pricing strategies

Interesting observation made regarding "shipped from and sold by amazon.com" products pricing strategy carried out by Amazon.com. Amazon often maintains itself as the lowest price for a product it sells, but in many cases it will keep its prices consistently higher than their competition, yet retain the buy box. Now the interesting results come here: Above a certain price point, Amazon wins all the sales from the buy box (no surprise, since they retain the buy box), but go low enough, and suddenly Amazon loses sales to their competition, despite Amazon's retention of the buy box. This can not be explained by the actual price of multiple units adding up to the key $25 level. So far, an explanation for this is unknown.

Amazon Japan offering 3 months free service for professional accounts

If you're thinking about trying out selling on Amazon Japan via Progenomics LLC solutions services, now is the time. Amazon is continuing its "3 months free" promotion for new sign-ups for a professional account, which is a great opportunity. So you don't pay anything to Amazon for a full 3 months. After that, Amazon will start charging your credit card the full 4,900 yen a month.  Amazon USA and Canada typically offer only 1 month free!

Amazon Japan-amazon Prime Membership benefits

Delivery systems in Japan are very advanced, fast and cost effective. For customers, Amazon Prime memberships cost around half of what they do in the USA. And in most cases, same day delivery is available if you order early enough in the day. And there is also no price requirement for free shipping. I have bought items for under $6 in the morning and received them with no shipping charge in the evening. That is one of the reasons Amazon is growing so fast in Japan. Customers in Japan value speed and good service and that's what Amazon delivers.

Progenomics LLC Launches Amazon Blog

This blog will detail important information concerning Amazon in different countries. Please check back frequently, as new posts are added as more information becomes available.