On February 6th, an emergency press conference was held regarding the capital and business alliance between KDDI, Mitsubishi Corporation, and Lawson. On my way home, my smartphone rang, so when I answered it, it was someone from a competing carrier.
“Mr. Ishikawa, what does KDDI want to do by buying Lawson?”
Advantages of KDDI and Lawson
So far, not only KDDI but also NTT Docomo has invested 2.1% in Lawson. If it’s a point or data marketing collaboration, that level of investment or business partnership is sufficient.
However, this time, KDDI will invest nearly 500 billion yen and will own Lawson’s shares on a 50:50 basis with Mitsubishi Corporation. Considering it’s a competing carrier, it’s no wonder why KDDI is spending 500 billion yen on Lawson.
The simple benefit for KDDI is that “profits can be expected.” KDDI President Makoto Takahashi says, “Lawson makes annual profits of 50 billion yen.Therefore, there are benefits to investing in the company.”
KDDI used to earn tens of billions of yen annually from roaming revenue from Rakuten Mobile. I thought I would receive a stable income for six years, but as Rakuten Mobile expanded its network all over the country, the roaming income I had been counting on suddenly decreased. The investment in Lawson should help make up for the miscalculation of not receiving roaming revenue.
Another benefit is that it is easy to understand from a general perspective that it is an expansion of the au economic zone. Rakuten Mobile has a huge Rakuten Economic Zone, and its online shopping site “Rakuten Market” is doing great, unlike its mobile business. Softbank has Yahoo Shopping, and the business integration with LINE could potentially increase its influence even more (though things weren’t going well at all before the business integration).
While Rakuten and Softbank offer online shopping, KDDI’s access to Lawson gives them access to over 14,000 physical stores nationwide. By distributing coupons to au users, increasing the frequency of their visits to Lawson stores, having them pay with au PAY, giving them Ponta points, and linking this to data marketing, it will likely lead to the expansion of the au economic zone.
KDDI owns Lawson, but the two companies have many overlaps, such as KDDI having au Jibun Bank and Lawson having Lawson Bank. However, KDDI President Makoto Takahashi dismisses this idea, saying, “That idea is already outdated.”
KDDI does not want to take Lawson under its umbrella and sell smartphones at its stores. It is true that in areas where it is difficult to run an au shop, such as in areas with a declining population, it is possible for Lawson stores to take over au processing operations, but it seems that the main goal is not to convert all Lawson stores into au shops. .
Lawson President Sadanobu Takemasu wants to realize the concept of a “global real x tech convenience store.” Specifically, the goal is to realize a delivery service that can deliver products from Lawson in 15 minutes, which is currently undergoing trial and error. They also want to provide added value by installing terminals in stores that allow remote customer service and receiving consultations on banking, insurance, healthcare, etc.
Physical stores are severely understaffed. Additionally, as logistics issues become more serious, DX is required for convenience stores. If convenience store management becomes more efficient, it will result in lower costs and higher wages. As a result, it may lead to solving the labor shortage.
However, there are limits to what Lawson can do alone to achieve this goal. Therefore, it became a subsidiary of KDDI, which is strong in communications and technology.
Bringing KDDI’s specialty to Lawson
On the other hand, speaking of challenges for carriers, in the domestic market, most people now have smartphones, and the population is not increasing, but is decreasing. Carriers need to break away from the traditional business model of competing for the number of subscribers and increasing communication fee revenue.
President Takahashi said, “A lot has changed from last year to this year. MWC, where we will be exhibiting at the end of February, used to be a place to announce new smartphone models, but recently it has become an exhibition for corporate business.
KDDI wants to work with various partners and increase profits. “Rather than simply selling smartphones, we aim to connect all industries to sustainable growth through communications and turn this into a business.”
KDDI is a company that is very good at working with partners and then crafting them into new business models.
For example, when we partnered with Netflix, we created a pricing plan that included Netflix viewing fees. As a result, Netflix’s cancellation rate has decreased, while KDDI’s communication fee income has also increased. Nowadays, other carriers in Japan are starting to work together with Netflix in some form, and overseas carriers have begun to often imitate price plans that include viewing fees. This business model was so successful that companies like YouTube Premium and Apple Music began to want to partner with KDDI.
Recently, KDDI has demonstrated that the satellite broadband service “Starlink” can be used in disaster situations, making SpaceX happy. It appears that SpaceX will also be promoting Starlink as a disaster preparedness tool in countries other than Japan.
President Takahashi said, “We’ll take something that started overseas, bring it to Japan, add Japanese value, make it really good, and take it globally.This is what we’re aiming for.”
Regarding Lawson, he said, “We provide Japanese-style hospitality.Our idea is similar to that of bringing a highly value-added convenience store to Asia and globally.(It originated overseas) I would like to create added value and go global again.There is also the idea of buying a telecommunications company globally, but I don’t think that is the way to expand anymore.” (President Takahashi)
KDDI has many overseas bases, and could provide communications, technology, and even human support for Lawson’s overseas expansion.
Softbank failed when it acquired America’s Sprint, NTT Docomo is trying to expand globally with IOWN, and Rakuten is trying to expand globally with a completely virtualized network, but KDDI and Lawson are using their “international competitiveness that combines telecommunications and convenience stores” as a weapon. It seems that they are aiming to expand globally.