■Future outlook
1. Consolidated earnings forecast for the fiscal year ending 2024/10
The consolidated earnings forecast for the fiscal year ending 2024/10 is currently not disclosed, and will be announced as soon as it is decided. Generation Pass (3195) is proceeding with the narrowing down of priority investment policies in order to achieve a faster growth rate than before, and the idea is that investment plans and business plans will be announced as soon as they are finalized. In order to realize “accelerated growth in sales,” which is set out as a basic policy, in the EC marketing business, marketing will be further strengthened by the “EPO” method and continuous use of “MIS” that supports it, and the number of products handled will increase and the introduction of D2C products will be expanded. For product planning-related businesses, we plan OEM products that meet customer needs by utilizing marketing data accumulated in the EC marketing business, and develop low-cost, high-quality products through cooperation with our company and cooperating factories overseas.
Monthly sales for 2024/5, which were announced in 2024/6, were 1,334 million yen, up 11.0% from the same month last year. Strong sales of home appliances, interior products, pet supplies, baby products, etc. which are moving-related products contributed. The cumulative total from 2023/11 to 2024/5 remained steady, with a 4.1% increase compared to the previous fiscal year. Going forward, we will increase sales channels not only in the EC market but also at mass retailers, etc., and in addition to gaining awareness and sales opportunities for original brand products, we will also focus on increasing sales per product, leading to a further expansion in sales scale. Since the performance trend of overseas subsidiaries is also strong, we believe that it is possible to achieve an increase in sales equivalent to the previous fiscal year in the 2024/10 fiscal year.
On the profit side, we will continue to secure a fixed profit margin through sales at an appropriate price, and continue logistics cost reduction measures. Since certain results have been achieved in logistics measures since the 2023/10 fiscal year, a similar cost reduction effect can be expected in the 2024/10 fiscal year. Meanwhile, there are currently concerns about logistics. At Rakuten Ichiba, which is one of the main EC malls developed by the company, the Rakuten Group ＜4755＞ will begin a “delivery quality improvement system” from 2024/7. Under this system, a “strongest delivery label” is given to mall vendors that meet certain standards that contribute to improving customer convenience, such as next-day delivery, etc., and there are great advantages for consumers, such as shortening search time and saving effects. Although store openers are expected to contribute to sales expansion, etc., such as an increase in search rankings, etc., there are also many possible risks, such as an increase in receipt and shipment burdens at partner warehouses. The company is carefully examining whether or not to participate in the same system.
2. business strategy
The company has set “to a global value chain beyond the EC framework” as the future image of its business, and aims to build a value chain that exceeds the EC framework from within Japan to the Asian region, and expand and develop globally in the future. First, partner companies will be expanded from domestic companies to the Asian region, and a value chain to co-create customer value such as EC marketing and planning, development, and manufacturing of original brands will be built between each company, and growth will be accelerated. The following measures are being promoted in each business from among the priority investment policies that have been narrowed down.
(1) EC marketing business
(a) Commencement of USP business
In the EC marketing business, Rakuten Ichiba, Yahoo! Utilizing know-how that has been optimized at EC malls such as shopping and Amazon, we have built many in-house exclusive sites that cannot be realized with existing EC malls, such as product development with unique concepts, EC with specific themes, EC with characteristic payment methods, etc., and we are constructing a USP business based on our EC site group that organically combines them.
This is different from EC site operation within EC malls, and it is necessary to attract customers in-house, but since detailed marketing is possible, in addition to being able to provide detailed services according to customer attributes, it is also compatible with repeat purchases, subscription purchases, etc. A self-operated EC mall is built as a platform, so to speak, but the company handles 2.12 million products at existing EC malls through transactions with over 950 partner companies, and in the USP business, these products are sold on in-house sites that are individually differentiated and optimized. By selling products combined with sophisticated marketing, we will operate it as an EC site with uniqueness that is not influenced by trends in other EC malls.
Operation of 3 sites began in 2024/4, and an improvement cycle will be constructed by analyzing marketing information in the future, and based on the results, it is planned to expand to about 10 sites within 1 year.
(b) Expansion of D2C products
Utilizing big data accumulated so far in the marketing business, we will proceed with sales of our own products planned and developed as D2C products. D2C products are products where a factory or manufacturer plans, develops, and manufactures products and sells them directly to general consumers, or products manufactured by companies planning products and directly requesting them from the factory, and they are an enhanced product lineup that the company has planned and developed as PB (private brand) products until now. At the same time as establishing an original brand, sales channels will be expanded not only to EC malls but also to mass retailers, and sales will be promoted by directly appealing the functionality and good design of products to consumers. Since price competition can be avoided due to differentiation from other companies' products, profit margins are high for original brand products. The company has an existing brand called “s! In addition to enhancing the product lineup of “mplus” and “Kaksing,” new brands that meet customer needs will be added, and efforts will also be made to enhance the brands.
(2) Business related to product planning
In product planning-related businesses, we will promote preparations for the operation of a new factory in Laos. The Laotian subsidiary proposes new products to clients based on high-value-added original functional fibers developed by China's Qingdao Shinkabo Trading Co., Ltd., and produces products for which contracts have been established as branded products such as “with core.” Laos is connected by land to China and Vietnam, where the company's subsidiaries are located, so transportation is convenient. Avoidance of China risks can be cited as a reason to establish a factory in Laos instead of China, and it also has a high advantage in terms of labor costs. In the 2023 fact-finding survey of Japanese companies expanding overseas (Asia/Oceania edition) (announced in 2023/11) conducted by JETRO (Japan External Trade Organization), valid responses were obtained from responses from 4,982 Japanese companies active in 20 countries in the same region. Looking at the same survey results, it was found that there was a salary difference of nearly 5 times that of 129 dollars in Laos compared to 576 dollars in China with respect to the average value of basic monthly wages for manufacturing and workers. By strengthening cooperation with Qingdao Shinkabo Trade, we will improve sales by developing and commercializing high value-added materials in China, and reduce costs through production with reduced labor costs in Laos, thereby contributing to the company's profits and profits.
(Author: FISCO Analyst Tomokazu Murase)