Emergence of service-added model in B2C for small-sized
companies
Taro Kamioka
Graduate School of Commerce and Management,
Hitotsubashi University
2-1,Naka,Kunitachi,Tokyo,Japan
81-42-580-8946
kami@higashi.hit-u.ac.jp
ABSTRACT
Independent site administration is not as easy for small-sized
companies as it is for large ones in the field of B2C e-commerce
from the perspective of limited resources. The most prevalent and
effective method of compensating for such limited resources is
through participation in organizations such as intermediary sites
like online shopping malls. On the other hand, the recent
movement in Japan which has caught our attention is the
emergence of a scheme where customers who access specific sites
are privileged to receive exclusive services. This sort of scheme
will be referred to here as the service-added model. Though the
idea for the service-added model is very simple, it without a doubt
enables small-sized companies to increase the access volume to
their sites as well as the chance for interaction between the site
and customers. At the same time there is a negative aspect of this
movement: that this subsequent increase in access volume may
cause small-sized companies to neglect the movement of
establishing relationships with customers. Yet it is believed that
the service-added model could be a promising choice for the sites
of small-sized companies as a future B2C model because it allows
them to retain the high degree of freedom regarding decision-
making and the use of customer data compared with the
intermediary model. The idea is supported by our research on
sites adopting the service-added model.
Categories and Subject Descriptors
K4.4 [Electronic Commerce]: Distributed commercial
transactions
General Terms
B2C Management
Keywords
B2C, small-sized companies, intermediary model, service-added
model, customer relations
Permission to make digital or hard copies of all or part of this work for
personal or classroom use is granted without fee provided that copies are
not made or distributed for profit or commercial advantage and that copies
bear this notice and the full citation on the first page. To copy otherwise,
to republish, to post on servers or to redistribute to lists, requires prior
specific permission and/or a fee.
ICEC’06, August 14-16, 2006, Fredericton, Canada.
Copyright 2006 ACM 1-59593-392-1.
504
Kazuhiko Yahata
Graduate School of Commerce and Management,
Hitotsubashi University
2-1,Naka,Kunitachi,Tokyo,Japan
81-42-580-8683
kaz.yahata@srv.cc.hit-u.ac.jp
1. INTRODUCTION
The use of the internet pushes the limits of time and space and
allows even small-sized companies to expand their businesses by
acquiring a considerable number of customers. Small and
medium-sized companies account for 17.6% of e-commerce sales
in 2003 in Japan[6].
On the other hand, it is said that independent sites run by small-
sized companies rarely have succeeded in B2C e-commerce. One
of the largest reasons is due to their scarce management resources.
To compensate for the disadvantage, they deploy an intermediary
model B2C where customers access the company’s site through
the intermediary sites of online shopping malls and the like.
However, there are a tiny number of shop sites(the paper uses
“shop sites” to mean B2C e-commerce sites run by small
companies) that have yielded a profit through online shopping
malls. Moreover, even the companies earning a profit dislike the
intensification of control by intermediary sites in recent years,
which led them to seek ways to avoid depending on intermediary
sites.
In relation to the movement of seeking for independence in shop
sites, we pay attention to the emergence of the service-added
model, which is structured so that it necessitates going through
certain shop sites in order to access sites that attract a great deal of
users[4].
So far this type of B2C model has been rarely investigated. Most
researches on B2C in small-sized companies are focused on the
adoption of e-commerce(ex.[2][5][10]), and similarities and
differences of e-commerce in regions or culture(ex.[3][8][9]).
This paper compares the service-added model with the
intermediary model in B2C that small-sized companies adopt, and
looks into the characteristics of the service-added model. The
aims of the service-added model are not only to reinforce the
capabilities of shop sites, but also to increase access to them. The
service-added model will primarily be reviewed here in terms of
the latter objective. A total of twenty-six interviews were
conducted with the staff of the sites from three companies
providing service-added model services in Japan as well as staff
from eleven shop sites that use these services. The results from
the interviews helped conceptualized the model in this paper.
Moreover, questionnaire surveys were conducted on users of NC
Nippon-dot-com 1 , which is one of these service-providing
companies. The results from the surveys will also be analyzed in
this paper.

2. THE INTERMEDIARY MODEL

2.1 Scheme of the intermediary model
The first major hurdle to overcome in order to conduct B2C is
finding a method to generate awareness for one’s own website in
order to increase access to it. While many consider accomplishing
this through means such as the use of banner advertisements or
search engine advertisements, the strain of engaging in this sort of
investment can be enormous for small-sized companies. For this
reason, there are numerous instances where many small-sized
companies in Japan are initiating B2C through the intermediary
model rather than the independent model from the perspective of
cost-effectiveness.
Figure1 presents the simplified intermediary model. The
intermediary site, rather than serving merely as a collection of
links, fulfills the important role of inducing customers (users) to
choose the shop site. The shop sites are charged at basic rates
corresponding to the time of usage and a metered billing-style
usage fee depending on earnings, which is paid to the
intermediary sites. The most typical example of the intermediary
model is the online shopping mall, though it is found in matching
services or other B2Cs. Unless otherwise specified, the B2C
intermediary model refers to the model used by online shopping
malls within the context of this paper.
As a global trend, online shopping malls are being included in
general portal sites with enhanced search functions. In addition to
this, a distinguishing aspect of online shopping malls in Japan, of
which the online retailer Rakuten Inc2.specializing in B2C is an
example, is that there are a great number of micro companies
setting up branches in them (with approximately 150,000 shop
sites participating as of December 2005). According to rankings
of Japanese language sites by Alexa3 , Rakuten Inc. is ranked as a
stable third place after Yahoo! Japan4 and Google Japan5.
A benefit of the intermediary model for customers is that by
allowing them to efficiently choose products and services at good
terms from a greater number of shop sites, they can address their
needs in a single stop. The shop sites gain as well in that they are
able to expand their capabilities to contact potential customers
without expending considerable costs for e-branding, which refers
to the process of generating awareness among customers for a
shop site’s URL.
However, due to the fact that customers will limit search criteria
by factors such as price when searching shop sites, there is a
tendency for access to be biased in favor of certain shop sites
among stores in the same type of business. Customers are unable
to notice factors that are difficult to render as search criteria. (i.e.,
benefits resulting from the integration of the shop's online and
1
http://www.nc-nippon.com/
2
http://www.rakuten.co.jp/
3 domain and their customers are encouraged to purchase products
http://www.alexa.com/
4 there. This enables the shop sites to avoid paying the usage fee
http://www.yahoo.co.jp/
5
http://www.google.co.jp/
Figure1. The intermediary model in B2C e-commerce
physical presences) Given this situation, it is considered that if the
product is not unique, then this will serve as a disadvantage to
companies of smaller business scale. The more popular the shops
become, the more likely their trust will be enhanced leading to
increased access and trust.
On the contrary, for unpopular shop sites, it will become
increasingly difficult to gain more access if there is a popular
shop site in the same type of business.
2.2 Intensification of control with the
intermediary model
For the reasons described in the previous subsection, the number
of shop sites that are able to continuously increase earnings
through the intermediary model is extremely limited. It is said that
in Japan only a small percentage of shop sites are earning profits
at major online shopping malls. However, even these few
competitive shop sites are facing the dilemma of whether to
continue the association with intermediary sites.
For these shop sites, participating in online shopping malls was
suppose to be an advantage by tapping into a framework for
interacting with customers at a low cost. However, the framework
of the intermediary site can hinder developed shop sites in the
creation of new schemes. The intermediary site is not so flexible
to adjust itself to the creation of new schemes by developed shop
sites. Meanwhile, those shop sites furnished with competitive
ability have been able to raise awareness on the internet regarding
their brand and have been able to get by without the help of the
intermediary sites. To put it another way, there is a dilemma
posed that the more revenue source shop sites generate for an
intermediary site, the more incentive they have to break away
from the intermediary site.
If shop sites are able to retain the customer data having acquired
through the intermediary sites after breaking away, they can
communicate directly and perform transactions with customers as
they have done in the past. That means they can continue the
same business based on such data without paying fees. Moreover,
even if shop sites stay with intermediary sites, there is anther
scenario for decreasing the dependency on them. Shop sites set up
links to their newly built sites outside of the intermediary site
since the transactions do not occur in the intermediary site.

505
In actuality, this sort of phenomenon has only become noticeable
in the last two or three years in Japan. In response to this, the
intermediate sites are strengthening controls such as restricting the
use of customer data and prohibiting links used as bypasses so
that shop sites that do not go through the intermediary sites are
unable to communicate with customers directly. In particular,
controls for customer data are being reinforced from the
standpoint of the Act on the Protection of Personal Information,
and the retention (“enclosure”) of customers by intermediary sites
is being strengthened.
However, these controls pose a hindrance to the fully developed
shop sites aiming to develop rich relationships with their
customers. This in turn is considered to be why there is a
tendency in shop sites to minimize their reliance on any one
particular intermediary site. An examination of the one hundred
best-selling shop sites on Rakuten Inc.’s site as of 3 October 2005
reveals that eighty-six of them possess a separate Internet entity in
addition to their presence in Rakuten’s site.
2.3 Customer data ownership rights in online
shopping malls
When shop sites setup branches with their own brand name at the
online shopping malls, the first part of their URLs are the same as
the URL for the online shopping mall, at least in Japan. That is to
say, while each shop site is advertising their own URL they are
also simultaneously publicizing the URL of the online shopping
malls in which they have branches.
There is recently an assertion from the side of the shop sites in
that they would like to be able to freely use data from customers
in response to the restrictions on the use of customer data
implemented by the intermediary sites. That makes sense if they
made efforts acquiring the customers. In particular, shop sites that
have been participating in online shopping malls since their initial
launch have, in conjunction with intermediary sites, been making
a contribution to boosting the brand of the online shopping malls.
For this reason, they are in the position of claiming that the right
of ownership regarding customer data should lie with them.
Accordingly, the shop sites believe that in the event that they
should break away from the intermediary sites, there should be no
restrictions placed on the retention of the customer data acquired
through them.
However, it can be difficult to determine who has the right of
ownership to the data of individual customers. This is because the
acquisition of customers by certain shop sites is often complicated
in terms of whether the customers were acquired through the
efforts of the shop site itself, through the efforts of the
intermediary site, or through the efforts of another shop site
belonging to the intermediary site.
Currently at online shopping malls, both the intermediary sites
and the shop sites are involved in advertising towards the public
inside and outside of shopping malls. If a shop site attracts a
customer outside of the shopping mall, who have not accessed the
mall, and the data property of the customer should belong to the
intermediary site, this will decrease the incentive of the shop site
to make such an effort. The shop site will think it is better to
concentrate on acquiring customers inside the mall. But the
necessity for shop sites to make this sort of effort is going to be
506
lessened as the brand of online shopping malls is established since
the time of start-up. It may be best to clearly define the soliciting
of customers to online shopping malls as the role of the
intermediary sites in the long run.
On the other hand, in reality, there are a fair number of shop sites
in online shopping malls that have no grievances regarding the
consolidation of control on the part of the intermediary sites.
Those are the shop sites that do not have extra resources for
customer management independently and fall into one of two
categories. The first type consists of shop sites with low access
that do not want to devote resources to the independent
management of customer data. The second type is comprised of
elite shop sites which, conversely, receive a large volume of
access and would have to expend an unduly amount if they create
a structure to manage customer data independently. For the latter
shop sites, it is more effective for them to leave the infrastructure
for B2C to an intermediary site and to deploy the tactic of
growing by unifying with the brand of intermediary site.
Naturally, the intermediary sites should implement a strategy of
nurturing such elite shop sites to sustain a long-term relationship.
Yet even in this strong and long-term relationship between shop
sites and the intermediary site, issues related to the ownership
rights of customer data remain on the side of the shop sites. What
will happen if there was a situation where conflict arose between
them in the future? The structure of intermediary model is
significantly slanted in favor of the intermediary sites over the
shop sites in terms of customer data.
3. THE SERVICE-ADDED MODEL
Figure2 presents the service-added model in a simplified manner
in relation to the intermediary model.
The service-added model arranges for users to go through certain
shop sites in order to access sites-for-added-service that provide
attractive services. Connecting to the sites-for-added-service that
provide additional services results in some type of usage fee paid
by the shop sites. The attractive services include useful
information, contents, supporting systems, and so on. Basically
the sites-for-added-service are designed to provide attractive
services or products such as sale items, which means it is possible
to build the site as a specialized shopping site.
Figure2. The service-added model in B2C e-commerce
If only those customers who have been certified by the shop site
are able to access the site-for-added-service, then it naturally
becomes easy for the shop site to forge a relationship with their
customers. The shop site is not subject to controls from the site-
for-added-service in relation to interaction with customers on the
shop site or the management of customer data. At least, as long as
there are no other special device used, the site-for-added-service
should not be able to monitor the interaction between shop site
and customer.
Of course there is the possibility that as the shop sites making use
of the sites-for-added-service become fully developed, there will
be a shift toward independent site management. Being different
from the case with the intermediary model, it is more probable for
shop sites to continue the relation with the site-for-added-service
as long as there are no regulations from these sites-for-added-
service.
In the next subsections, the service-added model will be compared
to affiliate program in 3.1 and members-only-sites in 3.2, in order
to make its characteristics easier to understand.
3.1 Comparison with the affiliate program
When one compares the affiliate program to the service-added
model, one can see that in an affiliate program, incentives are
obtained from a site-for-added-service by encouraging a customer
accessing shop sites to access the site-for-added-service, which
serves as the target site. However, in the service-added model,
such incentives are not given as presuppositions. Instead the
objective of the shop sites in attempting to partner up with the
sites-for-added-service is to promote the acquisition of customers.
To accomplish this, shop sites provide a structure where users can
utilize its own services as well as the services of the site-for-
added-service, which complement the shop site. The service-
added model provides the structure in which sites-for-added-
service offering particular services cannot be accessed by
circumventing the shop sites. In opposition to this model,
generally in the affiliate program users can connect to and access
the target sites without going through the affiliated sites, such as
the shop sites. Despite both sides having such clear, fundamental
differences, there is still the possibility that the service-added
model and the affiliate program can coexist. In other words, when
some sort of transaction takes place at the site-for-added-service
by customers who have accessed it through the shop site,
incentives attributed to the shop site in the service-added model
do not give rise to structural contradictions.
3.2 Comparison with members-only-sites
The service-added model bears an exceptionally strong
resemblance to an augmented model of members-only-sites.
Members-only-sites are sites that can only be accessed by
certified customers which, put another way, would be to say that
members are provided with certain privileged services. Inside of
these members-only-sites, members of the company site or the
shop site are furnished with privileged access to services on a
number of sites that have an agreement with the main site. For
example, going through the members’ login of most airline
company sites also entitles the user to privileged access to rental
car, hotel, and other such sites with which the airline has
agreements. In such cases the rental car, hotel, and similar sites
serve the same function as a site-for-added-service. However, a
fundamental difference is that whereas in the service-added model
507
the shop site and the site-for-added-service have an independent
relationship, member-only-sites are constructed in a specialized
format as described below.
Generally members are authenticated at the time when they access
these members-only-sites, and then they can receive various
additional services. On the other hand, in the service-added model
customers are authenticated at shop sites in order to access the
site-for-added-service. However, as these membership sites have
the general tendency to become massive in scale it is essential that
overall consistency, including authentication and payment, be
maintained between the members-only-sites and multiple service-
providing sites for them.
For this reason, the burden of building and managing these
membership sites is substantial making it unrealistic for small
companies to bear the costs for this. On the other hand, because
the basic framework of service-added model provides functions of
authentication on shop sites, the model is cost-effective and
suitable for small-sized companies.
4. CASE EXAMPLES OF THE SERVICE-
ADDED MODEL
In this secton NC Nippon-dot-com and Picturing Online6 will be
introduced as case examples. While both companies, which run
the sites-for-added-service, assist in acquiring and retaining the
customers of shop sites, the objectives they focus on as sites-for-
added-service are different. At NC Nippon-dot-com increasing the
access of shop sites is emphasized, whereas at Picturing Online
stress is placed upon providing specialized services which would
be costly if individual shop sites try to provide independently.
From the next section onward the service-added model with its
objective of increasing access will be discussed, primarily through
the case example of NC Nippon-dot-com.
4.1 NC Nippon-dot-com
NC Nippon-dot-com carries out regional sites-for-added-service
which provides the users with useful utilities like schedule
management, participation in surveys offering prizes, and
provision of local information on supermarket sales and the like.
Additionally, in recent years they have even come to allow users
to access reviews written by eminent journalists.
Figure3 displays the basic flow of access. NC Nippon-dot-com
began providing its services in 2000, and by 1 September 2005
there were approximately three hundred and eighty participating
shop sites, with the number of users logging in (hereafter referred
to as login users) to these shop sites reaching approximately
950,000.
These login users are managed at each shop site by the site-for-
added-service and are unable to log in from other shop sites.
Because the user must pass through a particular shop site ordained
for that user in order to access the site-for-added-service, the
user’s eye is naturally drawn to information displayed on the shop
site. This is a move that provides the shop sites with a chance to
enter into deeper relationships with such users. In addition, it also
allows the shop sites to invite login users of the other shop sites
6
http://www.picon.co.jp/
 shop (hotel) site, an arrangement for accessing Picturing Online
has been provided and pictures taken at wedding ceremonies held
at the hotel can be put into online photo albums and ordered for
prints. Accessing the hotel’s site now has the benefit of allowing
the users to receive both the services of Picturing Online and of
the hotel site in a combined form. The hotel site is able to use this
combination as an opportunity to deepen the relationship with its
customers. Picturing Online differs from NC Nippon-dot-com in
that Picturing Online is a site-for-added-service as well as an e-
commerce site. Furthermore, Picturing Online customizes its
services to match up with each shop site. That is to say, the
service-added framework of Picturing Online is similar to a
members-only-site. In actuality, they customize and provide their
service to various different members-only-sites.

Figure3. Flow of access @ NC Nippon-dot-com 5. INCREASES IN ACCESS VOLUME

LEADING TO EXPANSION AND
through the site-for-added-service so that they will wish to receive
mail magazines, respondents for surveys offering prizes, and so PITFALLS
forth. In other words, shop sites are able to indirectly have all of Figure4 presents a simplified model in which access to shop sites
the users who access NC Nippon-dot-com as assets of potential is related to both (a) access to intermediary sites and (b) access to
customers. In order for the site-for-added-service to create future sites-for-added-service. Shop sites are opened in virtual spaces
login users to shop sites, they make surveys offering prizes on where large numbers of users are concentrated in the intermediary
their own, thus paving the way for the respondents to become model because the potential for users or customers to be drawn
login users for one shop site or another. into a previously unknown shop site is greater than in the case
where the shop site would be opened independently online.
Relative to the intermediary model discussed in Section 2, the However, connecting to intermediary sites does not guarantee
ownership and management of customer data has been clarified increased access to shop sites. While there is the line of reasoning
between NC Nippon-dot-com and the shop sites. Put another way, that “Major shopping malls are once again playing an important
since NC Nippon-dot-com and the shop sites have different role in terms of expanding the reach of small and medium-sized
brands and URLs they are essentially able to manage customer establishments toward consumers” [7], in reality effort must be
data independently of one another. Since these login users are expended by each shop site in order to procure access for
signing up with the objective of accessing these sites-for-added- themselves. In contrast, in the service-added model, users register
service, ownership and management of their customer data their login account in a shop site to obtain access to the site-for-
belongs to NC Nippon-dot-com. In this manner, the site-for- added-service. When these users access the site-for-added-service,
added-service manages and holds the authentication controls of they must also access the shop-site.
customer, but shop sites gain the right to access this customer data
and approach login users of their own sites as long as the
permission from the customers is also being established. Taking
the Act on the Protection of Personal Information into
consideration, most shop sites had better entrust the management
of data to sites-for-added-service and take steps to obtain
permission from the customer for an approach to utilizing such
data that suits the customer.
In addition, shop sites are set up separately from the site-for-
added-service through NC Nippon-dot-com, which means that
only the shop sites are able to monitor and control the activities of
customers in the space of the shop sites. Through associating
customer activity data within shop sites with Nippon-dot-com’s
data base, the developed shop sites are able to carry out
sophisticated analysis.

4.2 Picturing Online

Picturing Online provides services to the users of shop sites that
allow users to share online photo albums and order online prints.
Naturally, this site-for-added-service has come to form Figure4. Accessing of shop sites through the intermediary
partnerships with shop sites that offer services in the same context model and service-added model
of photo-taking and printing. For example, at the bridal page of a

508
Through the independent model, intermediary model and the like,
getting customers to access shop sites a number of times in the
space of a week is difficult for all but the heavy users. Conversely,
in the service-added model, although login users of a shop site are
not really fully aware that they are accessing the shop site, it is
possible that they consequently access the shop site a number of
times per week in order to visit the site-for-added-service. If the
site-for-added-service is attractive enough, then access to this site
will rise, which in itself results in laying the groundwork for
increasing access to shop sites. Accordingly, this provides
motivation for the shop site to increase their login users by
proclaiming the appeal of the site-for-added-service.
The various shop sites connected to NC Nippon-dot-com tack on
a number of hooks to encourage login users to access the site-for-
added-service from the sites. The increased access to the site-for-
added-service is believed to also help increase access to the shop
site itself. Figure5 shows rise in the number of login users that
Hakata-Kicho, which mainly sells mentaiko (food products that
have been marinated in flavored sauce; consisting of red pepper
and pollack fish ovaries) in B2C, has acquired through its
affiliation with NC Nippon-dot-com. While the graph displays an
ever-increasing growth trend, it is quite believable that the
increased number of login users is connected with increasing the
total access to Hakata-Kicho’s shop site. In reality, this is
represented in combination with transitions in the total access
volume per month in Figure5.
Following the growth in login users and accesses to shop sites is
the question of what sort of effect the growth has on the shop sites.
The increase in access to the shop sites has not automatically led
to benefits for all of the shop sites, but the natural line of thinking
is that in all probability the number of purchases on shop sites can
be raised if the number of times the sites are accessed can be
increased. In fact, at NC Nippon-dot-com for the Kyushu region
the results (one hundred and twelve total responses) of a simple
survey given to login users confirm this mode of thought. Put
simply, while the yearly average number of purchases is 1.8 by
the login users that visit shop sites three times per week, it is 3.7
by the login users that do so four or more times per week.
Figure5. Change in access volume by log-in users to Hakata-
Kicho
509
Moreover, according to an interview with the owner in a hotel
that used Nippon-dot-com, reservations increased when they
notified users of the new rate plans and packages, and information
concerning room décor and renovated facilities on the shop
(hotel) site. Most of the increased reservations turned out to be by
the login users of NC Nippon-dot-com.
Though customers of this hotel were not expected to make
frequent visit the hotel site, it is possible for the login users to
access the site-for-added-service of NC Nippon-dot-com a
number of times per week, so that the users, through the process,
come to look at new information uploaded regarding the hotel.
In this way increasing the number of login users also increases the
probability that information on the shop site will be viewed.
However, just the same attention must be paid to the fact that
whether such opportunities are capitalized on or not is something
that depends on the effort of the shop site.
In order for the shop sites to survive, they must not only increase
the number of login users, but also create web pages that
effectively present the shop site to these users. Furthermore, while
it is also presumed that making the effort to deepen relations with
these login users would achieve beneficial results, the reality of
the situation is that the number of shop sites that have reached this
stage is extremely limited. The administrators of NC Nippon-dot-
com were asked randomly to select one hundred shop sites and
make evaluation of their efforts, of which eleven sites were
identified as being shop sites engaged in this kind of effort.
Behind this result, of course, there are instances where the shop
sites are unsure of what strategies should be taken to deepen the
relationship. However, interestingly it is found that increased
access even works toward creating a mentality in shop sites to
neglect deepening the relations with customers. As shown in
Figure6(a), contentment with quantitative increases in customer
relations results in a situation where shops site are not motivated
to raise the quality of such relationship. This is called here a
pitfall of the service-added model, and one of the typical patterns
for falling into this pitfall is described below.
The majority of administrators managing independent shop sites
who had been worried about not being able to increase access
became dispirited over not being able to sufficiently increase
access by even participating in intermediary sites. Administrators
with such experience then see the results of advertising the appeal
a site-for-added-service, which generates access to their own sites.
Figure6. Improved volume and quality following “becoming
customer”
This gives rise to the illusion that the B2C aspect of the shop site be claimed to exhibit a certain degree of result, considering that
is functioning successfully, and leads the administrators to cease the topics of the magazine is not only on mentaiko.
improving the shop site.
The second is what sort of influence the frequency of reading to
the mail magazine has on buying behavior. Analyzing the
6. IMPROVING THE QUALITY OF purchasing tendencies of readers of the mail magazine split into
CUSTOMER RELATIONS two categories based on frequency: “occasional readers” and
In order for the service-added model to be employed more “every-time readers,” the purchase percentage of “occasional
effectively it is essential for the shop sites to focus not only on readers” after reading the mail magazine is twenty-one percent,
improving the quantity of customer relations or their reach, but while the purchase percentage of “every-time readers” is thirty-
also the quality or the richness of the relationship[1]. In contrast five percent. The result suggests that people who read the mail
with the pattern described at the end of the preceding section, the magazine often have a higher purchasing percentage.
phenomenon of falling into this pitfall is not observed in shop The third is how psychological perceptions towards the shop site
sites that 1) disliked the consolidation of control in the change in mail magazine subscribers. The survey also sought free
intermediary model, and 2) strived to build deeper mutual comments related to “In what way has your impression of Hakata-
interaction with customers before they participated in NC Nippon- Kicho changed as a result of the mail magazine and the added
dot-com. These shop sites are strongly aware of the fundamental service?” In other words, they were asking for impressions related
importance of conducting mutual interaction with their customers. to the services made possible through Hakata-Kicho’s
In comparison with Figure6(a), the creation of customers are not participation in NC Nippon-dot-com. A classification of these
only directed to just unilateral expansion through reach alone; but open-ended comments reveals favorable comments (for example,
as Figure6(b) shows, the sites are constantly implementing impressions of the company have: significantly increased, become
improvements in both volume and quality. These shop sites are extremely favorable, become friendly, degree of likeability has
combining efforts toward creating their own unique richness with increased, etc.) comprised seventy-two percent of the responses.
the service-added model’s procedure for efforts to expand their Twenty-seven percent indicated no change in their impressions
reach. and 1 percent gave somewhat negative comments (Figure8).
However, it is not always the case that there is no point for
undeveloped shop sites in employing the service-added model.
Even when they have not reached the stage for immediately
achieving one-to-one communication with customers, if they are
still willing to establish and develop relations with customers,
there would be the means for gradually utilizing the benefits of
the service-added model. The case of Hakata-Kicho mentioned
above suggests how this works. At Hakata-Kicho, which had no
experience of B2C e-commerce before participating in NC
Nippon-dot-com, efforts have been made to deepen the
relationship with login users and respondents answering surveys
that offer prizes at sites-for-added-service as mail magazine users.
A survey was distributed in November in 2005 to 4,832 people
randomly selected from the customer data. The results of the 162
responses, which were received within two weeks after the survey
was distributed, were analyzed. The purpose of this survey was to Figure7. Relation between subscription to Hakata-Kicho’s
identify what sort of influence Hakata-Kicho’s mail magazine, mail magazine and buyer behavior
which is published through the framework of NC Nippon-dot-com,
had on customer relations. This mail magazine is not limited
solely to information related to the sale of mentaiko, but also
includes a range of information related to topics like Japanese
restaurants, food retail stores managed by Hakata-Kicho, bridal
services, and the like. Three of the findings from the survey are
presented below.
The first is the sort of influence that the mail magazine has on
buying behavior. Figure7 shows that twenty-seven percent of all
the people that read the mail magazines sent out by Hakata-Kicho
had ordered or purchased mentaiko from them (with seven percent
purchasing over the internet and twenty percent through their real
outlets). The content of mail magazines are not arranged to
customers on a one-to-one basis by analyzing their purchase
histories and buying tendencies, but rather it is a uniform mailing
with identical contents. Even so, the twenty-seven percent could
Figure8. Effect of subscription to Hakata-Kicho’s mail
magazine on impressions of the company

510
It is still the early stage of developing customer relationships, but
according to the results in the survey, Hakata-Kicho seems to
have raised the effectiveness of its approach toward its customers
by taking advantage of the framework of NC Nippon-dot-com.
7. CONCLUSIONS
In B2C e-commerce by small-sized company, the greatest
challenge has been on how to increase access to their shop sites.
The method of using online shopping malls through the
intermediary model has been the most popular among small-sized
companies with scant resources. However, through the
intermediary model, the majority of shop sites have not received
sufficient access. The few shop sites, which receive sufficient
access and are establishing deeper customer relationships, have
not been pleased about the consolidation of control from the
intermediary sites. This has led them to attempt to reduce their
dependence on them.
On the other hand, the shop sites retain their independence
through the service-added model. If the site-for-added-service is
sufficiently attractive, then the model provides a structure where
shop sites can easily increase the volume of user access. However,
increased access does not necessary guarantee actual benefits. To
take advantage of the increased access relies on their initiatives.
8. ACKNOWLEDGEMENTS
The authors wish to acknowledge the generous support of
Organization for Small & Medium Enterprises and Regional
Innovation, JAPAN. Our research draws on interviews with many
business people and information provided by them. We
particularly like to thank Hachiro Senoo(CEO of NC Nippon-dot-
com), Shoji Yuki(Owner of Hakata-Kicho), and Norihito
Ishibashi(Board Member of Picturing Online) for their time.
9. REFERENCES
[1] Evans, P, Wurster, T.S :Blown to Bits: How the New
Economics of Information Transforms Strategy,Harvard
Business School Pr .,October 1999.
511
[2] Grandon, E E., Pearson, M. J. : Electronic commerce
adoption: an empirical study of small and medium US
businesses, Information and Management, Volume 42 Issue
1, December 2004, 197-216.
[3] Hawk, S,: A Comparison of B2C E-Commerce in
Developing Countries, Electronic Commerce Research,
Volume 4, Issue 3, July 2004, 181-199.
[4] Kamioka, T., Yahata, K.:Added Service type E-Commerce
for small and medium-sized shops, Proceedings of Annual
Conference of Japan Society for Management Information
Autumn 2005,274-277.
[5] Matthew K. O. Lee, Christy M. K. Cheung: Internet
Retailing Adoption by Small-to-Medium Sized Enterprises
(SMEs): A Multiple-Case Study, Information Systems
Frontiers, Volume 6, Issue 4, December 2004, 385-397.
[6] Ministry of Economy, Trade and Industry, Next Generation,
Electronic Commerce Promotion Council of Japan, NTT
Data Institute of Management Consulting: Survey on Actual
Condition and Market Size of Electronic Commerce for 2003,
June 2004.
[7] Ministry of Economy, Trade and Industry, Next Generation,
Electronic Commerce Promotion Council of Japan, NTT
Data Institute of Management Consulting: Survey on Actual
Condition and Market Size of Electronic Commerce for 2004,
June 2005.
[8] Su, Qi-Ying, Adams, C.: E-marketing & e-businesses: Will
B2C e-commerce developed in one cultural environment be
suitable for another culture: a cross-cultural study between
amazon.co.uk (UK) and dangdang.com (China), Proceedings
of the 7th international conference on Electronic commerce
ICEC '05, August 2005, 236-243.
[9] Thuong T. Le, Anthony C. Koh: A Managerial Perspective
on Electronic Commerce Development in Malaysia,
Electronic Commerce Research, Volume 2, Issue 1-2,
Kluwer Academic Publishers, January 2002, 7-29.
[10] Yeung, Jeff., Shim, J., Lai, Y.: Virtual extension: Current
progress of e-commerce adoption: small and medium
enterprises in Hong Kong, Communications of the ACM,
Volume 46, Issue 9, ACM Press, September 2003, 226-232.