Nitori’s DX (Digital Transformation) Strategy

Nitori Holdings is rushing to transform itself through DX (Digital Transformation). The key to this transformation is blockchain (distributed ledger) technology. Nitori plans to operate a new system using this blockchain and to grow its outsourcing business into a multibillion-yen business by 2030. When you hear the word “Nitori,” everyone thinks of furniture sales, but you can imagine that the furniture sales business will probably reach a plateau in the near future. To compensate for this and grow the company, an alternative business is needed. For Nitori, it is “logistics. This is the same strategy as Amazon. They are trying to change into a logistics platform, not just a retailer.

Leading this transformation is Home Logistics, a logistics business company under Nitori Holdings. The company has consignment contracts with about 150 small and medium-sized transportation companies and is responsible for home delivery of products and delivery to about 550 stores nationwide. The company is developing about 500 functions using blockchain, including the formulation of delivery routes and advanced inventory management through artificial intelligence, which will be available in the fall of 2020.

Nitori Holdings’ Four DX Policies

Let me briefly introduce Nitori Holdings’ DX policy.

1. Digitize logistics-related information using blockchain
2. Build system infrastructure such as delivery route optimization using AI
3. Horizontal deployment of know-how such as proprietary automated warehouse systems
4. Earn several tens of billions of yen by 2030 by supporting outsourced logistics and digitalization

The e-commerce business itself has low barriers to entry, and many companies of all sizes are expected to enter the market in the future, but the important point is that the number of companies that handle post-sales logistics is not increasing. Conversely, logistics is an area in which there is room for entry, and if successful, a reasonable share of the market can be gained. However, it takes a certain amount of capital to enter the logistics business. Amazon is developing its own delivery business because of the capital it has earned from e-commerce. In the future, competition in the domestic logistics business between companies such as Yamato and Sagawa, whose main business is logistics, and companies that are not in the logistics business will be encouraged. We believe that this will result in positive effects for EC businesses, such as lower delivery costs.

DiDi and Uber have recently entered the business of transporting goods, and while most people think of EC only in terms of selling goods online, I believe that an integrated strategy that includes not only sales but also “delivery” will be necessary in future EC strategies.