This Japan Startup Is Changing the Way Your Kids Buy Fashion

Japanese fashion is unique, and so is the entire Japanese fashion industry. Today I would like to introduce you to a Japanese fashion startup with a genuinely unique business model.

Tsubasa Koseki and his team at Facy, have created a fashion marketplace based on instant messaging and relationship building between shops and consumers. Interestingly, this market is not dominated by major labels or global companies, but by more local, mid-market brands.

Tsubasa and I talk about his plans for Asian expansion, Facy’s chances for global domination in this niche, and the major differences between fashion retailing in Asia and in the West.

It’s a fascinating discussion and a great inside look at fashion retailing.

Show Notes

What is the last untapped fashion market The reason behind the recent boom in startup founders from Todai How SNS use differs between Asia and the West Why you may not be able to trust Japanese e-commerce reviews The biggest mistake fashion startups keep making Why the global fashion brands will be at a disadvantage over the next 10 years

Links from the Founder

Check out Facy Follow them on Facebook More about Facy on The Bridge

[shareaholic app="share_buttons" id="7994466"] Leave a comment Transcript Welcome to Disrupting Japan, straight talk from Japan's most successful entrepreneurs. I'm Tim Romero and thanks for joining me.

Every once in a while, I come across a startup with a business model that only exists in Japan. Now usually, this is because the startup is responding to a market need or a consumer behavior that also only exists in Japan. Occasionally however, only occasionally, I come across a unique startup with a genuinely good idea that has potential to make a global impact, and today, I'd like to introduce you to one of those companies.

Tsubasa Koseki is the CEO and founder of Facy, and Facy has developed a fashion marketplace based on, believe it or not, text messaging. Consumers with questions about fashion can ask for advice, and fashion brands and stores respond to those questions. Yes, yes, I know, messaging is already widely used in the fashion e-commerce industry, but Facy has a wonderful and minimal approach to it that really deserves attention.

Now, I grant you that the fashion industry as a whole is a bit outside of my core competence and in truth, I have a fashion sense that is perfect for podcasting, but Facy's results really speak for themselves, and Tsubasa and his company have big plans for expansion as well, but you know, Tsubasa tells that story much better than I can, so let's hear from our sponsor and get right to the interview.

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[Interview]

Tim: Okay, so we're sitting here with Tsubasa Koseki, the CEO and founder of Facy. So thanks for sitting down with us today.

Tsubasa: Yes, thank you, Tim, too. I'm very happy to present our project. I'm a big fan of your podcast.

Tim: Well, thanks. Let's get right into what Facy does, so you talk about o-to-o means in offline-to-online support services for fashion and apparel stores, so how does this work exactly?

Tsubasa: On our service, user can ask their fashion needs like Quora.

Tim: Quora? Like the Q&A site?

Tsubasa: Yes, yes, yes, yes, yes. User can ask their own fashion needs. For example, I'm looking for sneakers for the office, shop staff can reply to the post by uploading their item in their stores. User can ask additional questions. If it's okay, they can buy or reserve item.

Tim: I really think you got an interesting approach to e-commerce in general, but fashion in particular where it is this kind of calling response where you got customers texting like just random questions, and how detailed are these questions? Are they simple things like, "I'm looking for a new pair of sneakers for basketball"? Or do you get people saying, "I want a blouse that feels more like spring"?

Tsubasa: We have a lot of customer. They ask unique question. In this year, the most interesting question to me, 14 years old, Junior High School student asked, "I am a fashion beginner. I start to running fashion. What do I have to buy fast?" She asked.

Tim: Okay, and so how did the shops respond?

Tsubasa: So many shops respond to her. One of the shop respond, which is Levi's 501, branch respond, "Wear sneaker."

Tim: But I can see that being really interesting. It's bringing commerce back to a more one-to-one relationship and that's great, and so the business model is, you take 20%?

Tsubasa: Yes, yes.

Tim: Do the shops ship directly to the customer or do you handle the shipping?

Tsubasa: Yes, we are handling shipping and payment. We ask Yamato, Yamato is the biggest logistic service in Japan, to pick the item directly to customers.

Tim: That makes sense. Tell me about your customers. How many customers do you have and how many stores are a part of this system now?

Tsubasa: We have 500,000 users but one of our unique points is user can find favorite item by just watching fashion communication of our user and shops.

Tim: So the text that customers post if they're looking for new sneakers or a new fashion, these are public and everyone can see it?

Tsubasa: Yes, the other user can read. Most of the user don't post.

Tim: Just read?

Tsubasa: Yes, just reading.

Tim: Of that 500,000 users, how many are active? So how many log in, say weekly?

Tsubasa: Weekly, about 100,000 users to 200,000 users.

Tim: Okay, so it's a very active community?

Tsubasa: Yes.

Tim: Alright, and who are they? Are there more men or women, young, middle-aged? What's the typical user profile?

Tsubasa: Men and women in same percentage.

Tim: Really, 50/50 split?

Tsubasa: Yes, 50/50. Yes, there age, 25 to 35. They have their job and their salary is increasing but they're available time is decreasing.

Tim: I can imagine that that 25 to 35 age audience hs incredibly valuable audience to the fashion industry. That's the age where people are making branded decisions, when you go onto the business world, you kind of have to throw away your style from college.

Tsubasa: They have free cash to buy fashion item.

Tim: And what about on the business side, is there any particular type of story that is popular? Are they like high fashion brands, are they chain stores, are they like outdoor stores?

Tsubasa: Our main clients, in Japan, there are so many middle-priced brand. In US, apparel market is divided, luxury brand or fast fashion, but in Japan, a middle-priced brand is so strong.

Tim: Okay, and it's these middle price brands that are the most popular stores on the platform?

Tsubasa: Yes. General startup, one of the biggest fashion brand in Japan using our service and the 22% of sales is from Facy.

Tim: Wow, but you know, that does kind of make sense because these mid-market fashion brands in Japan now, in some ways even hurt by the e-commerce revolutions. The major fashion brands, the Chanels and the Louis Vuittons, they have huge marketing budget. The fast fashion retailers have -

Tsubasa: Huge marketing budget.

Tim: Yes, they've got this special system, but yes, these mid-market brands are sort of stuck in the middle. They can't steak out a brand for themselves so this ability to communicate and have a conversation is really interesting.

Tsubasa: Yes, and I think in Asia, they have a big opportunity because people get more money, so people want to buy better product.

Tim: Yes, I think so. I mean, there's two things. If you look at a lot of the markets in Asia, there are two things that could work in your favor. First is you mentioned, there's this growing middle-class of consumers who have money to spend on fashion, and second, there's a lot of Asian economies where there's a much larger younger demographic in that 24 to 34 year-old range. But before we talk about that, let's back up a little bit and talk about you.

So you graduated from Todai and you worked in banking, Mitsubishi, and Lloyds as well?

Tsubasa: Yes, after graduating from Todai, the University of Tokyo, I studied in the University role on the Internet Technology, and therefore, I like to launch a financial service, utilizing internet technology in Mitsubishi Tokyo UFJ, but you know, in most of Japanese company, I think the best way to success to the business development or marketing for huge company.

Tim: Well, yes, I think all companies value sales, so you went into Mitsubishi with an idea that you were going to launch a new product for Mitsubishi?

Tsubasa: Yes.

Tim: Oh, you poor thing.

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Tsubasa: Yes, but later, internet is not a good career, so I decided to work as a relationship manager for a huge automotive company, and do you know Suzuki?

Tim: Of course.

Tsubasa: Yes.

Tim: Were you just trying to find a career and a job that you enjoyed, or was this part of kind of a long-term goal of starting your own company?

Tsubasa: Of course, working in financial industry, I think it's easy to make more money but I would like to launch our service, so there, I became 30 years old. I decided to quit job.

Tim: So why fashion? I've never really followed fashion - I mean, you can tell by the way I'm dressed - but you mentioned in an earlier interview that you've always been interested in fashion. If you're always interested in fashion, why the big detour into banking?

Tsubasa: Fashion market is very interesting because users wearing items more frequently in the other market. This reason is same to Amazon. In US. there is frequency of user are using Amazon. I think 14 times per year, so fashion is very important. User buy item more frequently than there is a market.

Tim: I guess it's an interesting point. The business of selling fashion,