Softbank Brings Midas Touch to Japan

Called eBEST Corp., the joint venture between Softbank and Best Denki Corp. will sell computer hardware and software, household electronics, furniture, books, sporting goods and other items. It is expected to launch at the beginning of the year.

The new corporation will be 66.7 percent owned by Best Denki, with the rest owned by Softbank and its group companies. The companies anticipate sales of 1.5 billion yen (approximately $14 million (US$)) in eBEST's initial year and 10 billion yen (nearly $100 million) by the year 2003.

While those sales goals sound lofty and overly optimistic for a new venture, Softbank has a history of turning e-commerce startups into gold.

Perhaps the world's most successful Internet investor, Softbank is the largest shareholder of Yahoo!, an original investor in E*Trade, and the majority shareholder of Ziff Davis publishing group and its online unit ZDNet. It owns equity stakes in dozens of other Internet companies as well.

From Snail Mail to Cyber Mall

Best Denki sells consumer electronics and other household goods in 500 stores throughout Japan and in other parts of Asia. The company has also sold its wares via mail order for some 20 years, but its president decided that mail order is a slumping business and that e-commerce is the heir apparent to the sales throne.

Like the rest of Asia, the Japanese e-commerce market is predicted to explode in years to come. The Japanese government forecasts online sales will leap to over $30 billion in the country by 2003, up from $6 billion last year.

One of the obstacles to e-commerce expansion has been the high cost of Internet access in Japan. Monopolized by Nippon Telephone & Telegraph and its exorbitant local calling rate, Internet access has cost Japanese users some three times as much as in the United States.

However, Softbank, Microsoft (Nasdaq: MSFT) and Tokyo Electric Power Co. announced earlier this summer that the will build an ISP to offer high-speed, low-cost service over a combination of cable, fiber optic and wireless technologies.

The companies are set to test the system next month and it could be online by next summer. Analysts say that the low-cost service could spark an increase in Internet usage, much like AOL did in the U.S. when it introduced its monthly flat rate charge.