Winners / Selection Rationale

START TODAY CO., LTD.'s (hereafter, START TODAY) operates ZOZOTOWN, which carries more than 210,000 items, representing 2,026 brands and 621 shops (as of the end of March 2014) with a strong fashion orientation. The items carried include clothes, shoes, handbags, accessories, cosmetics, and interior items. ZOZOTOWN has more than 6 million registered users, most of whom are in their twenties or thirties.
The company develops shopping-mall style websites. In its commitment to developing easy-to-use websites that do not to destroy the brand image of each participating shop, START TODAY has taken on the challenge of in-house system development, website design and logistics system development. By having all products go through its own logistics center, staff members can precisely measure all items. START TODAY posts extensive product information on the ZOZOTOWN site ─ in addition to indicating the item's exact measurements, the company also provides ten detailed photos, on average, for each item. The company believes that this provision of such detailed product information is what makes possible the online sale of fashionable apparel items. (ZOZOTOWN was launched in 2004, and the commonly held belief at the time was that it would be impossible to sell fashionable apparel products online.)
START TODAY's mission is to deliver to customers the products that the company's employees really like, and its policy has always been: "We only do what we love." The company has created innovations in its employees' work life by introducing a system of six-hour workdays and by offering benefits to those employees who choose to live close to the company's headquarters.

START TODAY targets customers who enjoy clothes shopping, people who would likely choose an article of clothing as a fashion statement, rather than because of its functionality or low price. The average customer age is 31.4. A breakdown by gender shows that 58% are women and 42% are men.
START TODAY's mission statement is: "We deliver what we love to people who say 'Love it!'" The company operates numerous online shopping sites that focus on fashion items. ZOZOTOWN is a fashion online shopping mall, and ZOZOVILLA is an online shopping mall for luxury fashion. ZOZOMARKET is a fashion online market for individual creators and small-sized businesses, operated by the company's subsidiary, Bracket, Inc. ZOZOUSED is a second-hand apparel online shop operated by START TODAY's subsidiary, Crown Jewel, Inc. These sites provide customers with the convenience of one-stop shopping.
ZOZOTOWN is Japan's largest fashion online shopping site, and it offers an extensive product lineup. It carries 2,026 brands, which is four or five times the scale of the second-largest online shopping site for fashion items. ZOZOMARKET carries merchandise from more than 60,000 stores.
ZOZOTOWN provides an easy search function for customers. Searches can be conducted not only by brand but also by product category, such as T-shirts or skirts, or by key words, such as "patterns featuring stripes, floral prints, or checks," "sleeve length," and "heel height." Customers can nail down their search by indicating the length of a dress or shirt from collar to hem, or the breadth across the shoulders. Because the company indicates the length and width of each item in five-millimeter intervals, customers can be confident that the item they have chosen will fit them. The company's commitment to the provision of accurate measurements for all items not only contributes directly to increased customer satisfaction and a higher repeat purchase rate, it enables the online sale of apparel items to fastidious Japanese consumers, who are some of the most selective shoppers in the world. Customers can save their search details (such as sleeve length) and use them repeatedly.
The company provides "coordination recipes" (recommendations for achieving a coordinated look) through a smart phone application, WEAR. Images of coordinated outfits are posted by the apparel brand's sales staff, specially selected users of the WEAR service (known as "WEARISTAs," people who are genuine fashionistas, like models, artists and fashion designers, etc.), and members of the general public. Website users can easily conduct a search for the featured items. Because images of these coordinated outfits are linked to an e-commerce site, items found on the WEAR site can be ordered. Since its launch in October 2013, more than 1 million coordination recipes have been posted (as of the end of March 2014). Through WEAR, users can post comments and share fashion-related information with other WEAR users via an SNS function. At WEAR's My Closet function, users can also keep a log of information about items they already own.
ZOZOTOWN enables apparel shops and brands to reach Japan's large population of fashion-conscious consumers (mainly in their twenties and thirties). START TODAY provides website space, conducts sales on a consignment basis, accepts orders from consumers, handles delivery, provides a customer support function, and undertakes consulting services for a one-time booth fee and a sales commission. The company assigns designated service staff to each participating shop, and these service staff members share information about sales trends and make proposals. Participating shops can use sales promotion space within their online shops at ZOZOTOWN without any additional fee.

START TODAY has created a unique value chain, which makes possible the online sale of fashionable apparel items, and contributes to the business' rapid growth and high customer satisfaction.

Procurement and merchandising:
The company will carry a brand only if it has been strongly recommended by at least one of its employees. This is one of the company's criteria for brand selection. The average age of employees is 28.7 (as of March 31, 2014). The average age of customers is 31.4 (as of March 31, 2014). Thus, employees and customers are in the same age bracket. At the company's online shopping malls, the merchandizing function of a shopping site is controlled by the participating shops and brands for the most part. It is the company's general practice to carry inventory on a consignment basis. In the case of ZOZOUSED, the online shop for second-hand clothes, sellers can request the delivery of cardboard boxes to their homes, obtain an assessment of the items they wish to sell, and then sell those items online.

Inbound logistics:
All products sold by START TODAY go through the company's logistics center. Apparel brands and shops send their products directly to the logistics center, and bear all shipping expenses. At the logistics center, fashion-loving employees measure the exact size of each item. They also take photos of each item, to show intricate detail. (On average, ten photos per item are posted online at each shopping mall website.)

Outbound logistics:
The company outsources delivery services. In Kanto area, it guarantees same-day delivery of an item if the order is placed before 9 a.m. Orders received by 9 p.m. are delivered before noon the next day. This service is available for orders placed in Tokyo, Kanagawa, Chiba and Saitama Prefecture. Until September, the charge for this service was an additional 500 yen per order. About 35% of total shipments use this delivery service. (Effective October 1, 2014, this service is offered free-of-charge, and free delivery has also been extended to the Kansai area. About 50% of total shipments have access to this quick delivery service). The rest are delivered free-of-charge if the total amount of a single customer order exceeds 3,000 yen. If the total order is less than 3,000 yen, the delivery fee is 350 yen.

Marketing and sales:
The company operates separate websites for fashionable apparel, luxury brands and second-hand fashion brands, so that apparel brands and shops can maintain their brand image.
The company tries to develop a friend-like relationship with customers regardless of the size (and profitability) of their orders. In order to provide sincere hospitality like the kind of service extended to personal friends, the company operates its own customer service function. It communicates directly with customers, using 150 different kinds of e-mail messages, so that customers can get the sense that they are receiving a personalized message. These e-mail messages include the care instructions for items a customer has just purchased, and announcements of attractive interior items to those customers who have changed their shipping address. The company calls this approach "Customer Friendship Management," or "CFM."

Services provided to shops participating in online shopping malls:
Service staff members assigned to each shop share information on sales trends and make proposals regarding merchandizing and sales promotions. This direct communication with participating shops enables the company to carry sufficient product variety and inventory at its logistics center. Sufficient product variety and inventory are crucial if the company wants to offer customers both an extensive selection of products and quick delivery.

Human resources management:
The company has introduced a six-hour workday system, from 9 a.m. to 3 p.m. (without a lunch break), and employees can leave the office at 3 p.m. if there is no need for overtime work. Employees are encouraged to live near the company, and those who do receive an extra 50,000 yen (roughly US$500) per month. (Employees are better able to contribute to the local community and cultivate ties with the local community if they live close to the company, according to management.)

Research and Development:
The company has created its own internal supply chain management system. This system integrates the merchandise registration system and the operating system for the e-commerce sites with the order processing and inventory management system, thereby eliminating the need for closing procedures for the sake of system operation and the relaying of any supplemental data. The company also designs its website internally. This enables frequent improvement in the website's design, and speeds up development when new services are added. Handling this function in-house also allows the company to maintain its unique characteristics.

The activities of START TODAY are selected and aligned with the company's mission statement: "We deliver what we love to people who say 'Love it!'" Activities are selected and coordinated around key strategic choices, namely the requirement that new hires be fashion lovers; the provision of products that fashion-conscious customers would want; the operation of an online shopping site focused on fashion items that allows for a convenient shopping experience; and the internalization of the logistics function, with the centralization of these operations at the company's own logistics center, ZOZOBASE. (Please refer to START TODAY's activity system map, which appears at the end of this report.)

• A fashion-focused shopping mall concept that enables maintaining brand image while simultaneously allowing for product comparisons.
• The selection criteria for determining which shops may be included is whether any members of the staff really love the brand.
• Adoption of a six-hour workday
• Use of a financial incentive paid to employees who live close to the company
• Provision of precise measurements for all products carried.

The founder and CEO Yusaku Maezawa has always wanted to deliver the things he likes to others who would also like those things. He started out operating a catalogue sales business for imported CDs and records in 1995. He added fashion items from his favorite brands to the product lineup when he switched from catalogue sales to an online shop in 2000. Despite the commonly held belief that fashion items could not be sold online, Maezawa gradually increased the number of brands carried by his online apparel select shop. In 2000, he succeeded in selling 100 million yen worth of merchandise. (When starting out, he had to take ownership of the stock he sold.) In 2004, when the total number of brands reached 250, with 17 participating shops, he reorganized these online select shops into one online shopping mall, "ZOZOTOWN."
Throughout the company's history, the core concept of the business has been to "deliver the things we love to people who say 'Love it!" This is reflected in the company's unique selection criteria for participating shops, which is to carry only those brands that have been strongly recommended by at least one employee. In other words, the company has consistently upheld its commitment to carrying only those products that employees like, and has limited its activities very selectively. While continuing to be guided by its mission statement - "We deliver what we love to people who say 'Love it!'" - the company has added new product categories, such as luxury brands and second-hand fashion items, and has begun offering new services, such as WEAR.

• Does not target customers with whom employees can't relate in terms of their fashion choices. Employees who can share the customer's thinking (in other words, these employees would be target customers themselves) is crucial to this company's success.
• Does not try to visually express the unique characteristics of ZOZOTOWN in its website design. By using mainly black, white and grey, ZOZOTOWN provides a neutral platform upon which participating shops can add their own colors.
• Does not send sales promotion messages from START TODAY. The participating shops are responsible for conducting sales promotion activities within their own shop space.
• Does not sell from purchased stock (as a matter of principle). Sells on a consignment basis.
• Does not advertise its online shopping malls through the mass media. Focuses on one-to-one marketing through a CFM (Customer Friendship Management) approach.
• Does not sell web-based advertisements on its online shopping websites. It does not earn income from advertisements. Instead, it keeps the website simple for easy shopping.
• Does not pay employees based on their performance. All employees receives exactly the same base salary and bonus regardless their position.
• Does not accept an eight-hour workday. The company has introduced a six-hour workday, but pays all employees the same base salary (per diem) that they would receive for an eight-hour workday. This has resulted in a 50% reduction in overtime.
• Does not outsource systems development.
• Does not outsource logistics management.
• Does not outsource website design.

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

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