Since our company’s founding, we have steadily maintained stable growth.
This is not a coincidence. We have built “a system that continues to grow stably” based on two specific strategies.
There have always been “trends” in new ingredients, etc. in the cosmetics and health food fields.
For example, products such as “coenzyme Q10,” “resveratrol,” and “enzyme drinks” can quickly increase sales when they became popular.
However, we develop and sell basic products such as “oligosaccharides” and “polyphenols,” which are not associated with “trending” genres of products.
In fact, one of our previous businesses (Wakeari (imperfect) Gourmet E-Commerce business ) itself created such a trend in the past, and was featured on television more than 30 times in one year, on several famous Japanese TV shows, such as “Gaia no Yoake,” “Asa Zuba!,” and “Manaberu!! News Show!”
What we discovered was that sales that are boosted by trends are only temporary.
Therefore, in order to achieve sustainable and stable growth, we are developing products in our current line of health foods and cosmetics by purposely focusing on “genres not associated with trends.”
For this reason, sales of our products are not influenced by “trends,” but rather consist of sales from fans who truly appreciate their quality. These sales do not rise and fall rapidly, and we continue to grow them stably, while gradually increasing the number of fans.
Approximately 70% of our sales are generated from subscription purchases.
* Subscription purchases: a convenient method of purchasing a product that is automatically delivered to you every one to three months
Most of our products are consumed in about one month, and are used continuously. Thus, many of our customers purchase a subscription.
Theoretically, under the sales system of subscription purchases, no decrease in sales should occur, since the same amount of sales as in the current month will also be generated in the following month (in practice, however, since a certain percentage of customers cancel their subscriptions, the amount of sales in the following month will not be equal to the amount of the current month’s sales, but will be reduced by a certain amount). Therefore, each time a new subscription member joins, monthly sales continue to accumulate.
That is why we continue to grow stably, as sales accumulate each month.
These two strategies have enabled us to steadily create “a system that continues to grow stably.”
* This stable growth strategy is not easily influenced by external factors. Therefore, we are not affected by disasters such as the Great East Japan Earthquake in March 2011, when we achieved the highest record in monthly sales for that time, despite the fact that we tended to refrain from engaging in new promotions.
We have adopted this strategy because I (Representative Director & President, Katsuhisa Kinoshita) myself once failed in business, and at that time, I became keenly aware of the importance of having “a system that continues to grow stably.”
Our company is characterized by a higher rate of return than a typical company.
Of course, this does not mean that we are using cheap product ingredients or neglecting customer service.
Because we do not compromise on product quality, our product costs are relatively higher than those of our competitors. In addition, our policy for customer service in the departments in charge is to “prioritize customer satisfaction without regard to profitability.”
In other words, we are not suppressing or reducing any necessary costs in areas related to manufacturing and customer satisfaction.
So, let me explain why we have a high rate of return.
When it was founded, our company started out selling local specialties from Hokkaido, such as crabs and melons.
Because it was a very competitive market, excessive price competition and battles over services became ever more intense, as the years went by.
In an effort to gain a slight advantage over other companies, we moved in the direction of “carrying out more sales promotion activities to sell to more people” and “preparing a wider variety of products to meet the needs of more people.”
However, advertising expenses and personnel expenses (due to the increased workload) were increasing year after year, and we became trapped in a vicious cycle in which sales went up, but we were actually only busy, without being profitable.
In addition to not generating a profit, we began to wonder, “Is customer satisfaction really increasing in proportion to the amount of work we do and the costs we incur, year after year?”
We knew that the answer was no.
This was because the increasing volume of work and increasing costs, year after year were not being undertaken for the benefit of our customers, but with the aim of beating our competitors and increasing sales.
We felt that there could be no permanence for a company that carried out business in such a way, and thus made a decision.
We decided to abandon the idea of “selling to more people and generating more sales.”
We stopped “selling more than we should,” which used operational power and costs to compete with other companies and generate excessive sales.
Instead, we decided to move in a direction that would allow the Company to spend all of the extra costs and power on improving customer satisfaction.
Specifically, we did the following.
Many times, we decide not to do things that a typical company would do to increase sales, when we consider that “if we engage in such activities, they might complicate our operations, and reduce the power and costs that can be directed toward customer satisfaction.”
We have abandoned the idea of “making more sales,” and have made a major change in direction to a management policy of “satisfying the customers who are in front of us, even if it means making fewer sales.”
The following occurred as a result of this change in direction.
“Sales promotion cost per order has been reduced dramatically.” “Personnel expenses per order have dropped dramatically.”
By stopping the strategy of “selling to a large number of people,” and selling only to those with a genuine need, management became very efficient, and unnecessary costs were drastically reduced on a per-order basis.
Meanwhile, as the Company devoted the extra costs and power to customer satisfaction, sales soared as the repeat rate improved, word-of-mouth spread, and the number of new customers increased.
Thus, a positive spiral began to occur as the elimination of unnecessary costs, time, and effort led to increased sales.
As a result, by thoroughly ensuring customer satisfaction, we have become a “high-margin” company with no unnecessary costs and personnel expenses in selling, general and administrative expenses .
* As I later learned, European luxury brands that have been around for more than 100 years, such as Louis Vuitton, have taken a similar approach in their management.
By operating under the policies of “selling only to those with a genuine need, rather than to a large number of people” and “valuing customer satisfaction with the intention of forming a lifelong relationship with those who buy from us,” these brands have built highly profitable and enduring companies.
Although we do not deal in luxury goods, we feel that we have a close affinity in terms of our management policy, and are becoming increasingly convinced that we can be an “enduring company.”
As a result of the above approach, we have become a high-margin company, and we will continue to grow by pursuing “appropriate sales” rather than “excessive sales.”
With the belief that “ensuring thorough customer satisfaction is the secret to high profitability,” we will continue to strive to improve our profitability by pursuing customer satisfaction.
I sincerely hope that our investors will understand our basic strategy and watch over us, as we continue to grow stably.