We have entered an era in which individuals’ and corporations’ data are considered the oil of the 21st century, as they can substantially impact industrial competitiveness. Yahoo Japan Corporation, a major internet services company in the country, has embarked on fully utilizing its big data to enhance convenience in people’s daily lives. For this installment of Leaders, a column featuring corporate management and senior executives, President and Representative Director Kentaro Kawabe explains his growth strategies to The Yomiuri Shimbun.
Many people around the world are using online services provided by the four tech firm giants in the United States — Google, Apple, Facebook, and Amazon, collectively called GAFA. These companies have changed our way of life and become extremely influential. Many people in Japan have found their services very useful.
Each company has its specialty, such as Google with its search engine, and e-commerce for Amazon.
We conduct a wide range of activities, offering more than 100 services including search and e-commerce. Users can enjoy a variety of experiences by accessing Yahoo Japan. We aim to increase our user numbers by making the most of the strong points of our services.
Yahoo Japan’s area of business operation is limited to Japan. A contract signed with the U.S. company that owns the Yahoo brand license does not allow Yahoo Japan to do business overseas.
While many Japanese firms have expanded their businesses in the world, we don’t have that option.
We are resolved to make our utmost efforts in Japan. We want to ensure our business contributes to improving people’s daily lives in every part of the country, including rural areas with small populations.
Currently, our revenue comes mainly from three business segments, and the core source is internet advertisements posted on various websites. Other revenue sources are e-commerce commission fees, including online auctions and membership service charges.
We have utilized the big data we accumulated through services such as search to further improve our business.
That enormous amount of data, however, should be valuable for other business operations as well. We will provide the data to other corporations and local governments to create a new source of revenue.
We will be able to establish new consumer demands and contribute to resolving social issues. We will, however, never divulge any information that could identify any individual. We will only present the results of our analyses.
Demonstration experiments are already underway. In a joint effort with a major distribution group, we found unexpected consumer trends during the winter vacation.
For example, the number of people who searched online for “What should I wear for a year-end party?” has increased threefold compared to four years ago. For online searches on osechi traditional Japanese New Year dishes, we found many people searched for “instagrammable osechi” or “fashionable osechi.” We also noticed an increase in the number of searches on New Year’s Eve for shrimp in chili sauce, which was not directly related to the New Year. This data would be useful for food stores when planning merchandise lineups.
In collaboration with a railway company, we plan to make train station overcrowding forecasts. To reduce overcrowding, we will analyze our railway line online search data in combination with the railway company’s data. For a theme park operator company, we will study customers’ areas of interest via their online search results to raise the percentage of return customers.
Local governments have requested us to analyze people-flow. Combining location information on people with the respective municipalities’ data, we will be able to enhance the appeal of touristic sites.
We will start operating such a business utilizing big data in October.
Active role in a cashless society
Yahoo Japan has been operating an online business. We would now like to make shopping in brick-and-mortar stores more convenient by starting smartphone payment services.
By amassing information from both online and retail stores, we will be able to further improve our data analysis accuracy.
Yahoo Japan and SoftBank Corp. established a joint venture, PayPay Corporation, and started a new smartphone payment service using QR codes. Internet companies and other entities have one after another started cashless payment services.
With cashless payment, we do not have to dig up small change out of a wallet at the counter. As PayPay users can transfer money to each other, splitting a restaurant bill is much easier. We do not have to keep household accounts, as we can verify payment history on a smartphone.
In order to increase the number of shops where customers can use the PayPay service, we do not require any transaction fees from retail shops. We envision generating revenues in the future from synergic effects developed from both existing businesses such as advertising, and new businesses including finance.
The percentage of cashless transactions in Japan is lower than those of other countries such as in Europe and the United States. This can be partly attributed to the fact that counterfeit bills are rare in Japan and people trust cash. Once people realize the convenience of cashless payment, however, I believe the service will become indispensable in our daily lives.
At the very beginning of the PayPay service, the issue of unauthorized credit card use arose. We have wholeheartedly reflected on our lack of expertise and technological development, and are working on improving our security.
A spate of personal information leaks from corporations is still taking place. Calls have been rising for stronger privacy protection.
Many people have been using Yahoo Japan and we fully recognize our responsibility in accumulating a massive amount of personal information.
In order to enhance data security, we are preparing to build a large-scale data center in the United States, where we expect less danger of a strong earthquake. We will continue to invest in securing user privacy.
From PC to smartphone
I was given my first personal computer when I was a fourth-grade elementary school student. My grandfather bought it and said to me: “Learn how to use this. Everyone will use PCs when you grow up.”
Although I used my PC mainly for playing games, I really got interested in computers at university when the use of the internet was spreading. I established a webpage design start-up business while at university.
I took on requests like putting professional sumo match results on the internet. After I ventured into making English webpages, I received many inquiries from overseas. Quite a large number of detailed questions came from French sumo fans, asking: “What is the name of this winning technique?” “Is this sumo wrestler’s name accurate?”
I was amazed what reach the internet could exert. I then realized that I could start a business with tens of thousands of customers by attracting sumo fans worldwide. I was completely absorbed in the world of the internet.
At the time Yahoo Japan was founded [in 1996], people would tell former president Masahiro Inoue: “Using a keyboard is not part of Japanese culture. Internet usage will never become widespread in Japan.” When I was working for a venture company, people would tell me, “We use the internet only on our PCs and will not browse the web on a mobile phone’s small display.”
Now people all over the world have internet access on their smartphones. Online services will expand their scope as long as technology advances in its user-friendly functions.
We will transform our company into a data-driven firm that contributes to society by analyzing and utilizing data, while ensuring its security.
■ Kentaro Kawabe / President & Representative Director of Yahoo Japan Corporation
Born in Tokyo in 1974, Kentaro Kawabe graduated from Aoyama Gakuin University’s Faculty of Law in 1998. Kawabe started a venture firm, Dennotai Corporation, in 1995. He joined Yahoo Japan in 2000 and assumed different positions, including senior executive vice president and chief operating officer in 2012. Kawabe took up his current position in June 2018.
■ Key Numbers
4 mil. users
The number of registered PayPay users reached 4 million in the first four months after the service started in October last year. PayPay gained public attention with its “10 Billion Yen Giveaway Campaign.” Yahoo Japan was founded in 1996. According to the company’s consolidated statement of financial position for the fiscal year ending in March 2018, its revenue was ¥897.1 billion. The consolidated number of employees was 12,244 as of the end of March 2018. SoftBank Group Japan Corporation and SoftBank Corp. are major shareholders, together holding 47.5% of total shares.Speech