Sony Corp. goes online in Japan

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TOKYO--Japanese electronics giant Sony Corp. set up an Internet retailer for its mainstay consumer products, and the move for online sales is expected to have major repercussions for e-commerce and retail business in Japan.

Sony has established Sony Japan Inc., making it the nation's first electronics company to forgo the existing family-like network ofthousands of retailers for its products by allowing for direct sales over the Internet.

Sony went online on Jan. 31, and the company expects sales of about $93.3 million in its initial year. Some of the first products to be placed on sale on the Internet marketplace will be Vaio personal computers, Handycams and Walkmans.

"The Sony Style site will forge a new relationship between the company and its customers through the integrated provision of products and related Internet services, application software and information," the company says in a statement. The site will be for Japan only.

The e-commerce business in Japan has been stymied by the strong network ofretailers affiliated with major manufactures. Retailers have balked at having companies undercut their business by slashing prices on a Web site, whilemanufacturers have operated under the threat that Internet sales may result in their products not making it to store shelves.

Sony has about 2,000 stores in its family of retailers in Japan, while industry leader Matsushita Electric Industrial Co. has about 10 times that figure.

Japan's e-commerce market is on the rise with 1999 figures of about $3.2 billion in sales. Internet usage is increasing while access fees are expected to drop.

Despite the potential, traditional retail affiliations and a lack of familiarity with Internet shopping have held back the e-commerce market in Japan. Most industry watchers say that the scales will be tipped when there is an Internet success story in the country.

The head of the Internet Business Division for leading Japanese ad companyDentsu Inc., Kotaru Sugiyama, says most major companies are watching with great anticipation the Internet operations of rivals in their sector.

"There have been no big successes in the Internet here yet, but the scales are on the verge of being tipped, and when a successful company does emerge, that will push many Japanese companies into overdrive in their Internet operations," Sugiyama says.

Copyright February 2000, Crain Communications Inc.

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