Winners / Selection Rationale

Industry background

Kakaku.com is a search engine that specializes in shopping support for such merchandise as personal computers, household appliances, cameras, and telecommunication services such as broadband access and mobile phone subscriptions. It provides information that includes product specifications, prices, and consumer evaluations, helping others to decide which product to buy from which retailer. It attracts more than 45 million visitors per month, with more than 948 million page views per month (in October 2013). Kakaku.com launched its service in April 1997, and not only is it the pioneer of price comparison sites, it has achieved an overwhelming dominant position in the market in Japan.

Unique Value Proposition

Kakaku.com's target customers are individuals thinking about buying some kind of product, either online or offline. Its serves a diverse customer base, in terms of their genders, ages and residential areas.
　　　　Kakaku.com provides "neutral" and "reliable" information, and through such information, it enables users of its service to decide for themselves which product to buy. "Neutral" information means that Kakaku.com, when listing product information, does not differentiate products with advertisements from those without advertisements. "Reliable" information means that the company filters out postings containing malicious intent. The company also monitors retailers listed on its website for their reliability to ensure that users will not fall victim to online scams. In addition, the company selects information putting the user's benefit first. The company lists retailers by their retail price (from cheapest to most expensive) for a specific product. It also shows critical evaluations posted by consumers, which appear to be a disservice to the retailers and manufacturers that pay for the services of Kakaku.com.
　　　　The company explains its value proposition--helping people to decide which product to buy-- in its mission statement:　
　　　　The moment of satisfaction is what we offer.
　　　　　　　　Find the best match for your needs, in the most reasonable way.
　　　　　　　　Tell others about your unique shopping experience at Kakaku.com.
　　　　Retailers and manufactures who purchase an advertisement at Kakaku.com can reach a large number of Kakaku.com users, who are strongly motivated and highly likely to make a purchase. In order to reach these users, retailers and manufacturers place advertisements (Kakaku.com's first source of income); they list their retail prices and provide a link to their website in order to direct users to their websites (Kakaku.com's second source of income). Kakaku.com charges retailers and manufacturers each time a user clicks a link. Through Kakaku.com, small retailers with a niche focus can acquire customers at a low cost.
　　　　As a third source of income, Kakaku.com provides agency services to its users on behalf of Internet Service Providers and insurance companies. The agency service is positioned as an extension of the price comparison service because Kakaku.com receives a commission when users purchase the ISP service or an insurance product at Kakaku.com after comparing prices and checking other product information at Kakaku.com.

Unique Value Chain

Its value chain focuses on enabling customers to make a reliable and easy comparison.
Data development and data presentation: Kakaku.com has developed a product database based on a unified scheme of specifications for better comparability. This process, although it enables Kakaku.com to present information in a unified format, involves a labor-intensive data entry process. It would be much easier to just copy and paste in the information provided by manufacturers and retailers, or use software to search the Internet to collect price information.
　　　　Information presented in a unified format results in better quality word-of-mouth evaluations by consumers because they are making comments based on a correct understanding of the basic information on those products and services.
　　　　Kakaku.com provides retailers with software so that they can directly input their own retail prices and indicate inventory information (i.e., product availability). This results in the almost real-time updating of retail information.
　　　　Consumers, meanwhile, post word-of-mouth reviews.
　　　　Kakaku.com makes comparisons easier by categorizing together similar products, as well as by allowing consumers to drill down the details regarding product specifications.
Quality control: Kakaku.com maintains the quality of the information posted by monitoring consumer postings 24 hours a day. It also monitors retailers, and sometimes even visits their premises, to assess their reliability.

Fit among Activities

Kakaku.com business unit's activity systems are selected and coordinated around such strategic choices as "create a receptacle for information," "accumulate information," and "make it easier to find information." (Please refer to Kakaku.com's activity system map, which appears at the end of this report.)

Innovation that Enabled Strategy

• Kakaku.com was one of the early adopters of consumer-generated content. This company is unique in its commitment to maintaining the quality of consumer-generated content. (For example, it monitors customer postings 24 hours a day.)
  
• Kakaku.com's unique database, which provides a solid foundation for the business, makes it easier for consumers to compare products and services.
  

Trade-offs

• Does not put retailers and manufacturers ahead of consumers. Kakaku.com has maintained its commitment to the provision of neutral and reliable information for consumers, even after the website began posting advertisements by retailers and manufacturers.
  
• Does not try to make a quick profit. Rather than focus on sales and profits, the company places a top priority on attracting more visitors. To do this, the company focuses on increasing the amount of consumer-generated information, and ensures that such information is reliable and relevant.
  
• Does not corral consumers. It does not employ such tactics as membership or point systems.
  
• Does not put emphasis on search engine marketing. (In the case of search engine marketing, advertisements are placed through the purchase of certain key words). Rather, it puts emphasis on search engine optimization, achieved through the diligent accumulation of content.
  
• Does not expand its business beyond shopping support services. Although Kakaku.com obtains information on consumer behavior and the retail business, it does not provide consulting services because such services are too labor intensive.
  

Consistency of Strategy over Time

From its start, Kakaku.com has been putting users first. It has been posting information that could work against retailers and manufacturers, but by doing this, it has won the trust and support of its users. This could have resulted in the loss of business opportunities with retailers and manufacturers for several years. But retailers and manufacturers eventually recognized the value of Kakaku.com's service, and started to pay for its services. Also, Kakaku.com has been employing a consistent approach. When it started out, Kakaku.com posted price information and word-of-mouth evaluations for personal computers. Retailers and manufacturers objected to such postings. However, more and more consumers have begun referring to Kakaku.com before buying personal computers. Over time, the number of retailers and manufacturers that have started to recognize the value of this service has grown.

Profitability

Both return on invested capital and return on sales exceed the industry average by a wide margin.

Activity System Map