Brick-and-Mortar is Japan’s New E-Commerce

Ten years ago, everyone know that e-commence would drive most retail stores, especially specially stores out of business, and with the Amazon juggernaut plowing ahead, there were very few dissenters.

But something very interesting is going on right now. Many e-commerce companies are opening physical stores. Even Amazon, going against all economies of scale, is opening up brick and mortar bookstores in expensive locations with full-time staff. And there a good reason for this trend.

There is something very reassuring about holding a product in your own hands. And it’s something that can’t really be replaced with high- resolution photos and customer reviews.

Tomohiro Hagiwara of Aquabit Spirals has committed both his company and a large part of his adult life to bridging this gap between the physical and the digital world and is helping online retailers jump into the physical world.

Of course, Aquabit Spirals’ technology does much more than this, and Tomo tells an interesting story of how it took his company more than six years of work before they closed their first deal and became an overnight success.

It’s an fascinating discussion and I think you’ll enjoy it.

Show Notes for Startups

What is SmartPlate, and why is it important? Why e-commerce offline needs to come offline How to close global deals as a small startup The difference between going global and being global Why Tomo abandoned his first business to follow his dream The value of accelerators in Japan Why founders can't work at big companies

Links from the Founder

Learn about SmartPlate Follow Tomo on twitter @hagi_w Friend him on Facebook SmartPlate pitch-deck SmartPlate explainer video Coverage on VentureBeat

[shareaholic app="share_buttons" id="7994466"] Leave a comment Transcript from Japan

Disrupting Japan - Episode 54

Welcome to Disrupting Japan - straight talk from Japan's most successful entrepreneurs. I'm Tim Romero and thanks for listening.

Ten years ago, it was a common knowledge that e-commerce would drive most retail shops especially small specialty shops out of business. With the Amazon juggling up, moving it full speed, there's no reason to really doubt that opinion. But something very interesting is going on right now, many e-commerce companies are opening physical stores at expensive locations with actual products and full-time staff. Even Amazon is opening up Brick and Morter bookstores across the United States

The truth is, there's something reassuring about holding a product in your own hands. It's something that can't really be replaced by high-res photos and online reviews. Tomo Hiro Hagiwara of Aquabit Spirals has committed his company, in fact, committed a large part of his adult life to bridging the gap between the physical and digital worlds. But before I'll introduce you to Tomo, let me introduce you to someone else.

Now, Tomo once had a thriving, profitable app development business that employed over 30 people, but he was committed enough to his vision of connecting the physical and digital that he turned down work and laid off most of his staff so he could focus on it. After working on it in obscurity for 6 years, he's now becoming an overnight success. But, Tomo tells the story much better than I can, so let's get right to the interview.

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Tomo: Okay, cheers!

Tim: Thank you.

Tomo: Thank you. I'm very glad to see that you're here

Tim: I'm sitting here with Tomo Hagiwara, CEO of Aquabit Spirals, and thanks for sitting down with me.

Tomo: Yes, thank you. Nice to meet you here, and I'm very glad to meet you today.

Tim: Great! Now, Aquabit Spirals makes the smart play which is a physical device that allows bookmarking physical objects with your phone, I think you can explain it much better than I can. What is SmartPlate and who uses it?

Tomo: SmartPlate is a physical bookmark, we call. It directly carries visual content to your Smartphone directory, just thriving only Smartphone on our device. Then, our SmartPlate can connect to certain places with internet services or content directly.

Tim: Okay. So, I'm looking at two versions here. One looks like a card and one is about the size of your thumb.

Tomo: Also, we have another type -- Sticker type.

Tim: What's the technology that's going on when you wave your phone ever this? How is it communicating?

Tomo: Ah, Okay. We use NFC technology - Near Field Communication, and also we can sample through QR code -- bar code technology to the labeled content. Not only QR code and NFC but also, we can sample Bluetooth Technology - BLE. We know it well as IPCon or something.

Tim: On the technology level, what happens when I wave my iPhone over this SmartPlay? What's happening?

Tomo: iPhone?

Tim: For example.

Tomo: Please use android, at first.

Tim: Okay. But, I wave my android phone over this SmartPlate -- what happens?

Tomo: Our device can deliver, can connect to sync to the internet content as I told you. So, it opens an online content directly on your browser or launches some specific application directly from the plate.

Tim: Okay. So, how is this different from, for example, the functionality of a QR Code?

Tomo: Basically, the same and if she doesn't need to install the specific application in advance. No apps to use it. So, please imagine how to use QR code to get a content. You have to find the apps, bar code apps at first, and then, tap and launch it, and then scan the QR code. It's now easy for everyone.

Tim: This requires no application to be installed on the phone at all.

Tomo: Yeah, right.

Tim: And right now, it only runs on Android, not yet iPhone?

Tomo: Right now, yes. But, iPhone started NFC technology already on hardware, but it's only protected on software right now. We were just waiting and we'll open the technology for everyone.

Tim: Fantastic. Let's talk a bit about how this is being used now because you got some really interesting things going on. You're running a showroom in Osaka.

Tomo: Yeah, okay. That case is a retail industry and we install SmartPlate into our partners, our Brick Store in Osaka. Actually, they don't have stock spaces in the store that means that's just a display for all our products in the store.

Tim: It's literally just a showroom?

Tomo: Showroom, just showroom.

Tim: What kind of store is it?

Tomo: It's a DIY stall store.

Tim: Okay. So, power drills and things like that?

Tomo: Right. Actually, their business started in an e-commerce site, so they're main business is online selling DIY goods and that means we cannot pack and fill all products online.

Tim: So, each item, each drill or saw would have a SmartPlate underneath it. You would tap your phone to fill your shopping card?

Tomo: Then, if you would tap some drill in the showroom, it opens the landing page on your browser and it shows some buttons on that one screen, a youtube movie on how to use it. Another button, there is the product information from the manufacturer and another one can open shopping card online.

Tim: Okay, so it's more than just e-commerce. So, a lot of information, product into --- Fantastic.

Tomo: Right. Yes.

Tim: I always find it interesting when companies move against the trend. So, all the Brick and Morter retailers are opening up on an e-commerce site. But, here we are, an e-commerce company, opening up a Brick and Morter Shop.

Tomo: Right. There's no inventory and there're no cash registers.

Tim: Right. That's a very innovative use of this technology for a first customer or an early customer. How did you convince them to try this? Or did they approach you with the idea?

Tomo: It's my idea.

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Tim: So, you approach them with the idea?

Tomo: Yeah. Right. It's about 3 years ago, I got that idea of using NFC technology in the showroom so that we can sell all our items. I got that idea in the summer and that DIY store, the CEO of that company, is my old friend. And so, I remember him -- "This is good for him." I called him in that summer and I explained my idea and he was very excited.

Tim: And so let's give this a try.

Tomo: Yeah.

Tim: And how did that work out for him? Is it selling well? Is it popular?

Tomo: In Japan? Actually, not so popular than now. This is a very brand new user experience, and probably as you know, NFC technology is not so popular in Japan. Currently, it's only for payment, as we know, -- FeliCa technology, it's part of NFC technology. In Japan, currently, we have only cases to use NFC technology for payment. So, it's not to give information for everybody or not for selling some items in a physical place. My case was faster in Japan, maybe not only in Japan but into the global market.

Tim: But, I love the idea. I supposed right now, the fact that it doesn't run on iPhone yet is a bit of a problem for the showroom experience.

Tomo: iPhone doesn't start reading NFC information right now. Probably,