Located in the country where reading is the common habit of most citizens, Japanese bookstores are usually thought to have the prosperous development. In fact, most of larger Japanese retail booksellers appear to suffer low profit and have relatively small scale. This can be explained by three reasons: the existence of the Saihan system, the lack of financial disclosure, and the return policy.
Through the Saihan system, all books must be sold at a fixed price set by publishers. Therefore, Japanese retail booksellers, especially new entrants, cannot use price as a weapon in competition and discount their books to increase sales. They are difficult to have loyal customers, as there is no difference between buying books from this store and the other stores. Meanwhile, unlike American market where most of customers buy books through “word of mouth”, in Japan, 41% customers buy books relying on review and advertisement (Otsubo, 2001). This definitely requires retailers to reduce their revenue for advertising campaigns.
Moreover, Japanese retail bookselling industry does not disclose their financial statements openly. Thus, it is hard to know exactly the total income of each retailer. This explains why the third biggest Japanese bookstore in terms of net sales – Kadokawa- is recorded to have a better financial performance than the biggest one – Maruzen (table IC-1.2. textbook). The financial reports are likely unable to express the real profit of the Japanese companies.
Finally, with the return policy, retailers can return unsold books to publishers for credit, so that they do not need to have stock inventory and require a big scale. Besides, most of Japanese retailers are privately own and operated by succession. They do not join the conglomerate corporations (Otsub ...