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Venture Enterprises Are Filling Niches to Make Inroads

April 7, 1998

Internet services are expanding to include "virtual malls" like this one. (Photo: MDM, Inc.)

The increasing number of businesses entering the Internet-services market and the ensuing competition have made it hard for even big companies to keep afloat over the past two years. Venture enterprises, however, surfacing despite these adverse conditions, are ensuring their economic viability by offering customized services--providing company information in English and sending faxes via the Internet, for example. The hallmark of these venture enterprises is their speedy marketization of high value-added services, which wins them customers in business and other sectors.

Swiftly Responding to Society's Needs
Shopping in a "virtual mall" on a computer screen was one service expected to have a great future in the world of Internet-related business, but this has not taken off as anticipated. U.S. giant International Business Machines Corp. (IBM) has withdrawn its version of this service, and big Japanese companies in the field have also languished. On the other hand, one new venture enterprise set up in February 1997 has already opened over 140 profitable shops. Its stores are popular due to system simplification. Thanks to the development of original software and other cost-reducing measures, operating costs for this digital mall are kept between 50,000 and 100,000 yen (370 and 740 U.S. dollars at 135 yen to the dollar) a month--only one-seventh to one-tenth the previous cost. And it has become so simple to run an outlet that even computer novices can easily update their store data.

Also thriving are venture enterprises that have answered the societal need for open information with Internet services making available information on businesses in English, targeting those looking to invest abroad. Fees are collected from enterprises wanting to give users free access to their annual reports and information; in two years information on 30% of all open-stock companies was gathered. Some venture enterprises, in addition to offering standard information, are making rapid headway and looking to profit by adding an Internet telephone function and a fax service.

Furthermore, businesses looking to support these venture enterprises are also emerging. Over 2,000 Internet service provider companies (ISPs) have entered the market; many, however, have caved in. This is where venture businesses are appearing in order to support provider services and boost sales. With the rise in the number of new computer users logging on to the Internet, providers are finding their customer-service workloads very heavy. A venture business service to handle customer queries has been established, answering the providers' wish to economize. There are even services offering to handle Internet dial-up operations for ISPs. By maintaining large-volume circuits, these businesses will be able to offer the use of their infrastructure at low cost to medium- and small-sized businesses.

Success Hangs on Technical Know-How, Ideas
On one hand, it is easy to start up an Internet-related venture business, as the initial financial outlay is quite low; however, competition is tough and the market volatile. The venture enterprises that have succeeded against the odds have done so by providing high-value services, by building their businesses on the basis of novel ideas, and by targeting corporate customers. It is nearly impossible to be successful in this market, where technology is constantly being revolutionized, without original marketing and technology.

ISPs in particular can be set up easily; all that is needed are simple tools to make connections. However, patrons are fickle and easily transfer allegiance to newer rival businesses if their service is superior. Big businesses have the power and means to keep their customers, but ventures, which are smaller in scale, can compete only by keeping their connecting fees low. This is where the supporting-service venture businesses, which can help cut the ISP cost passed on to the consumer, are filling a valuable niche.

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Trends in JapanEdited by Japan Echo Inc. based on domestic Japanese news sources. Articles presented here are offered for reference purposes and do not necessarily represent the policy or views of the Japanese Government.

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