MonotaRO’s main business is e-commerce sales of indirect materials for businesses such as factories, construction, automobile maintenance, etc. using the Internet.
The indirect material distribution industry in Japan is designed in line with the social background of the era of high economic growth, and it is extremely inefficient at present.
We believe that the significances of MonotaRO Group’s existence are to transform this with IT technologies such as the Internet, to improve productivity, and to create an environment in which business operators or customers can concentrate on their core businesses.
MonotaRO Group applies the business model, which has grown to a certain scale in Japan, to overseas and works on innovating the business procurement network on a global scale.
・ Low cost and efficient sales with practical use of scale and database utilizing e-commerce.
・ Transparent, fair, and easy-to-understand price based on the one-price policy.
・ Convenience with the product lineup of 18 million items and 450,000 items in inventory.
・ Providing low-priced, private brand products and trusted products imported by MonotaRO.
Growth by Rotating the “Business Growth Cycle” Leading to Sales Expansion
The Company has been making its business growth by expanding the sales by rotating the following cycle that contributes to the reduction of workloads in procurement process of indirect materials. Customer conveniences have been improved by implementing steps 1 through 3 below, and those steps then link the improvements to sales expansion in step 4. The business scale is being grown and expanded by the Company by continuing and accelerating the rotation of the cycle.
1. Expansion of Product Lineup
Increasing the range of products will expand the scope of one-stop shopping and reduce the workloads involved in requesting quotes and ordering indirect material purchasing. In addition, the number of online search keywords can be expanded with the increase in the number of products lineup, and the expansion of the number of keywords will first increase the number of visitors to our site and then lead to increase in the number of new registered customers and hence an expansion of the customer base (2).
2. Expansion of Customer Base
Data accumulated daily on indirect material procurement behaviors of customers contribute to reducing the effort necessary to search for customers' products by improving the search function of the Company's site. In addition, the accumulation of procurement behavior data leads to the improvement of promotion accuracy such as timely recommendation of products to customers, which also contributes to the reduction of workloads for searching for products. With the expansion of the customer base, the frequency of sales will increase even for products with low procurement frequencies, and such products will grow as well-sold products. Then, the sales frequencies are confirmed, and the products expected continued sales are to be kept in inventory. The expansion of the customer base will lead to the expansion of well-sold products, which will lead to the expansion of our inventory and private brand products (3).
3. Expansion of Inventory and Private Brand Products
If the products ordered by 3 pm are in inventory, they are to be shipped on the day of the order, and the customers are able to receive the products next day. Prior to our entry into the market, the products with low frequencies of sales required time to receive, but this reduction in lead time has contributed to a reduction in customers’ workloads required of waiting to receive the products. Recognition of this convenience increases the demand for the product and hence increases sales. Increasing inventory results in sales growth (4) through customers’ recognitions of the workload reductions of waiting for receipts.
Among the products that increase the sales, the private brand products are developed. Private brand products are price-competitive and offer the value of reducing the effort of customers to search for low-priced products, and at the same time, high profit margins can lead to increased profits for our company.
4. Expansion of Sales
Sales growth will enable the expansion of lineup of peripheral category products, including products with low purchase frequency. Expansion of peripheral product leads to product expansion in (1), and the “Business Growth Cycle” continues.