Reimagining Retail-as-a-Service as Japan Confronts Digital Transformation

This article was first published in R/GA Future Vision on January 27th, 2023

Lessons in digital transformation from one company’s platform reinvention

In Japan, increased regional competition has given the need for digital transformation a heightened sense of urgency.

Although the need for digital transformation has been discussed for around half a decade, Japan’s digital competitiveness ranking has been declining further every year since 2013, and some estimates indicate that Japan will lose up to 12 trillion yen between 2025 and 2030.

Why? Japan is characterized by the stability of its business environment and society as well as by a general high quality of infrastructure and services, including ICT infrastructures, communication technologies, education and healthcare. This steady environment led to little urgency for change, including the need to shift to digital. The effects can be observed on the scorecard highlighting gaps in multiple key areas. The low rate of digital talent (1%), who master technologies and digital transformation expertise, is reflected in the poor adoption of digital within industries – where ecommerce, telemedicine, mobile banking and manufacturing show single-digit levels of adoption.

What’s holding back digital transformation in Japan?

There are many hurdles when trying to promote digital transformation in a company. Some say that although it is beneficial to introduce software and applications that are considered modern, they do not reduce the time and effort required for manual input, that they incur large costs for functions that are not used in the enterprise, and that vendor lock-in and over-reliance on system integrators prevents them from developing systems that meet customer demands, which change from year to year.

Factors distinct to Japanese corporate culture are a primary contributor. Students are expected to enter companies straight after graduation, learn the ropes from their superiors, and stay at the same company for most (if not the entirety) of their careers. While there are undeniable benefits to this system that have helped power the modern Japanese business economy during the postwar era, it can also be a barrier to embracing fresh approaches. Innovation is expected to happen within, and there’s an overall lack of connection to global digital innovation happening abroad. Culture, tradition and language prevent young people from getting experience in new digital technologies and global platforms.

Older generations in Japan who are in the driver’s seat at most companies are still transitioning from paper to digital files, while the rest of the world is already moving on to a completely new generation of digital services, channels and content formats.

Another potential difference is that the West has embraced digital services as a solution to overcoming inadequate physical infrastructure, unreliable transportation, and poor customer service – problems that don’t exist in Japan, where designing digital services that surpass existing customer expectations for customer service and physical retail experiences is actually quite a tall order.

These issues can pose a challenge even for companies working to drive digital transformation forward in the country, like b8ta, a pioneer of Retail-as-a-Service (RaaS) in Japan supporting brands, product makers and back office operations with RaaS solutions.

Teaching an old platform new tricks

Japan is now facing a big gap that will be hard to overcome without companies in the country making drastic changes to their approach to digital innovation. Businesses need flexibility to scale and change, and monolithic solutions, no matter how modern or localized, are often not the way forward. R/GA’s work with b8ta provides a clear example of the benefits of such a flexible approach.

As the company launched in Japan, it found its operations required a lot of manual work and back office overload, which introduced opportunities for human error. With an aim to expand its business further into the APAC region, b8ta urgently needed to build a streamlined back-end environment to evolve its digital operations for the future.

Not in a position to rebuild their platform, b8ta came to R/GA with the challenge of enhancing its current platform to maximize efficiency, as well as making it more modular and integrated with other systems – including Japanese software for retail stores, commerce, back-office and POS solutions. To revamp the platform in support of the needs of the Japanese market, b8ta needed such essential changes as integration with Japanese back office and inventory software, enhancements on product catalog management, localization flexibility with full Japanese and English language support, and the ability to tailor admin and consumer-facing tools according to local business needs.

RaaS to the Future

R/GA worked with b8ta to support its needs in the Japanese market, improve the platform to offer more value to Japanese brands, and make the platform much easier to operate for b8ta’s team. We first partnered with b8ta to create a concept of what the platform should look like and how it should function in order to provide a roadmap for expanding the platform. Instead of asking for a high price to do a features report and recommendation without any tangible outcome, we worked at a fast pace across six weeks to assess the current b8ta platform, create impactful and practical improvement recommendations and ultimately create a working prototype of what the platform should provide, including designs, new features and future possibilities. Providing this real-world example of what the platform could accomplish enabled b8ta to build confidence for the full rollout.

Once this stage was complete, we moved ahead and partnered with b8ta to work on a dramatic enhancement of the existing platform. With surgical precision, we worked on the software and ensured that the platform could be easily expanded and improved upon in the future, rebuilding key areas as modular, API-first components. We then integrated Japanese warehousing and POS systems and removed a large number of manual processes required by the old system. To prime for future expansion, we not only integrated support for both English and Japanese, but included a capability to add more languages in the future.

For four months, we worked closely with the b8ta team to release their new platform across all b8ta stores. Not only did R/GA enhance and improve the RaaS digital platform, we also created a system that can be deployed for new clients powered by b8ta, enabling them to expand their business model as an RaaS software provider on-demand for large retailers. We helped b8ta achieve dramatic reduction in manual labor necessary for their operations, and reduced cloud infrastructure costs by 40%, with a simplified platform that not only adds value and provides better insights for b8ta, but can be replicated for other brands powered by their platform.

b8ta’s RaaS platform work and partnership showcases how companies in Japan can tackle difficult and complex digital challenges, without spending years planning how to completely revamp digital infrastructure.

Traditionally, big enterprise providers advocate for an approach promising monolithic, bullet-proof solutions over the course of long-term commitments – often failing to deliver real value to the businesses and customers. Most companies would benefit from focusing instead on tackling small digital initiatives that can deliver value quickly without dramatically disrupting ongoing operations.

We have observed again and again that companies who take a more lean and agile approach, beginning by creating quick, working prototypes that leverage world-class SaaS platforms, are often able to validate solutions faster and more cheaply, mitigating drawn-out timelines and risks further down the line.

Taking an iterative approach that incorporates consumer input and stakeholder feedback early on in the process of enhancing digital services can yield faster and better results for many Japanese companies, and help ensure they are not left behind in the race to widespread digital transformation. b8ta’s partnership with R/GA testifies to how lean digital innovation can propel brave and bold businesses into the future.