Travelocity, Office Depot Set Sights on Japan

Two U.S. companies Tuesday announced plans to enter the growing Japanese e-commerce market, with online travel service (Nasdaq: TVLY) forming a partnership to sell travel products and services, and Office Depot, Inc. (NYSE: ODP) setting up a subsidiary Web site.

The Fort Worth, Texas-based Travelocity said it is joining Japan Airlines, All Nippon Airways and 11 other international air carriers to form an online company selling to Japanese consumers. Travelocity said it will be a shareholder in the new company and the principal technology provider.

The site, set to launch by the end of the year, will offer air, car, hotel and vacation packages, as well as other products and services. Other partners include Northwest Airlines, United Air Lines, Air New Zealand, Qantas Airlines and Singapore Airlines.

Japan Set for ‘Explosive Growth’

Travelocity president and chief executive officer Terrell B. Jones said the venture reflects the company’s international strategy of working with local partners to “participate in the explosive growth in online travel demand abroad.” More than 20 million Japanese citizens are online, and Internet penetration is expected to double by 2003, said Jones.

Other statistics bear out that view. A recent report from Roper Research found Japan to be the fastest growing country in terms of personal computer ownership, with half of all Japanese now online. Further, a study released last month by Forrester Research found that Asian e-commerce will spur $1.6 trillion (US$) in revenue by 2004, making the region a major force in the global Internet economy.

A separate study, from Andersen Consulting and Japan’s Ministry of International Trade and Industry, predicted that Japanese e-commerce will rise from about $4 billion in 1999 to $693 billion in 2003. The report predicted that business-to-business (B2B) e-commerce, which rose 420 percent in 1999 to $3.2 billion, will jump to $651 billion by 2003.

Office Depot’s Viking Expands Overseas

The Delray Beach, Florida-based Office Depot said its Viking Office Products subsidiary launched an online office supply store in Japan, The site, the fifth international site for Viking, uses features of the company’s U.S. Internet operation, including the ability to order by catalog number and a “Supplies QuickFind” feature that helps customers identify the correct supplies for their business machines. It also tracks whether supplies are in stock.

Customer response to the company’s European sites has been “very positive,” Office Depot chief executive officer Bruce Nelson said. “Our goal is to continue building our Internet sites throughout the world,” Nelson added.

Priceline, HP Also in Japan

Other e-tailers are adopting a similar strategy. Name-your-price company, Inc. (Nasdaq: PCLN) last month announced its plan to enter the Japanese market through a partnership with Softbank. The site will be Priceline’s fourth outside the United States.

Computer maker Hewlett-Packard Co. also has a partnership with Softbank to create a new company to sell computers and printers in Japan.

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