The digital shift caused by COVID has drastically changed the purchasing behavior of consumers in the real world. Under the circumstance, how should companies with real stores approach consumers? We have invited Mr. Hitoshi Inamasu, the CEO of DOTZ, to talk about LINE Mini Apps, an app gaining great attention from the retail and service industries, including the background to this attention, comparisons with the existing native apps, and the benefits of using LINE Mini Apps.
COVID changed the consumers’ purchase behavior
Mr. Inamasu spent many years at a major online ad agency in charge of everything from new customer acquisition marketing and CRM in the e-commerce industry, and then moved on to marketing and sales promotion for a consumer goods manufacturer, gaining knowledge about the online shopping and retail situation. How do you think consumers’ behavior have changed after the COVID?
I feel that more consumers are doing “planned purchasing”. Planned purchasing is a term unique to the retail and distribution industry and refers to the behavior of consumers who come to a store after clearly deciding in advance what they want to buy, such as “I will buy this manufacturer’s this product of this size (color, scent, packaging, etc.)”, and buy that product.
I strongly felt this in 2021 when I was in charge of a lifestyle store in Osaka. We utilized AI cameras to count the amount of traffic in front of the store and the number of people entering the store to measure what kind of customers were visiting the store and making a purchase.
The results revealed a low store visit rate and a high CV rate calculated by the number of visitors and the number of customers who made a purchase. This means that only customers who clearly want to buy are coming to the store. I felt like I was witnessing a situation where planned purchasing is becoming a habit among many consumers. This was the same for a drugstore around the same time. Many customers decided on what to buy in advance by looking at flyers and came and bought only those products.
On the other hand, there is “unplanned purchasing” as an opposite to planned purchase. This is a term for the purchasing behavior of customers who visit a store without deciding what to buy. In the past, one of the keys to increase sales in the retail world was how to attract unplanned customers to the store and encourage them to make impulse purchases. However, now that wandering around town and noticing interesting things in a storefront has drastically reduced by COVID and consumers are more habitual about planned purchases, I believe that companies with real stores need to adapt to this change. And the key to this is the digitalization of the stores.
I see. When you say “digitization of real stores is the key” to adopt with the changes in purchasing behavior, the challenges become very specific. What is the key to achieve this?
Since the most important touchpoint is the information gathering before store visit, I believe that digital posting of information and direct communication with customers will become more important than ever before. The key is how well the information you want to give is conveyed to customers prior to their visit.
Native app challenges
Currently, native apps (apps installed on smartphones and tablets via app stores such as Google Play and App Store) play a central role in communication with customers. What are the challenges of native apps?
As you said, many companies start by creating native apps to improve customer communications. But this takes time and significant cost. The biggest negative aspect is that the app market is saturated and the installation hurdle is becoming very high.
The probability that the customers will continue to use the app after installation is unlikely. For example, NTT.com’s survey on push notification allow rates shows that only 23% of users who install native apps allow push notifications. This means that companies can make real-time contact with only about 20% of installed users via the app.
Repro data also shows that native apps lose 77% of their DAUs (daily active users) within 3 days of download, and retention drops to about 10% after a month. These show that native apps get uninstalled after a short period of time and it is very difficult to maintain value for the high cost.
There is a method of attracting customers to install an app called ASO (App Store Optimization), but it has not showed its effectiveness. In the end, apps rely on user engagement and reviews to attract customers. However, as Inamasu-san mentioned, the current saturated market of apps makes it difficult to gather engagement and reviews. From the Irep’s point of view, attracting users for native apps is quite challenging.
The current challenges in the native apps are:
- Long production time and high production cost
- High running costs (updates, ads to attract customers, etc.)
- Takes time and effort to install→Customers may feel disgust to installation
- Most likely to be not used daily→Customers may not allow push notifications
- Low continuation rate→Easily uninstalled
Of course, there are cases where the high cost can still be beneficial. But native apps need to be carefully considered that these challenges may lead to low customer communications. Instead, we strongly recommend using LINE Mini Apps.
What is LINE Mini Apps
Please tell us about LINE Mini Apps.
LINE Mini Apps is a web application that can be published on LINE for free. It is launched inside LINE to communicate with customers.
The greatest point is that it is launched on a huge platform with 92 million users in Japan. Also with LINE Mini Apps, because LINE is already installed, one of the challenges with native apps that it is hard to get installed, is already solved.
But this does not mean that all native apps should be replaced by native apps. I believe they should be used together, taking advantage of each.
From the company’s point of view, this will allow for a more detailed approach of native apps for loyal customers and the LINE Mini Apps for light and middle customers, instead of using native apps to approach all customers.
For example, when you shop for something at a store, you may be asked to register as a member of the app. With native apps, you have to enter necessary information to become a member, but with LINE Mini Apps, all you have to do is “allow” the app and you’re done. This ease is by far the most appealing point to light customers who are not familiar with native apps.
Future of LINE Mini Apps
LINE Mini Apps is gaining more attention lately with its easy implementation. According to the announcement made in “LINE BIZ DAY 2022”, the number of companies/stores using LINE Mini Apps as of March 2022 reached 4,000. It has grown rapidly from 600 in September 2021.
We expect that this trend will continue, but what industries do you think will introduce LINE Mini Apps? How will it be used?
Currently, the majority of customers introducing LINE Mini Apps are offline stores, mainly restaurants. It is used mainly to complement the digitalization of offline stores such as for taking takeout orders, taking orders inside the restaurant, issuing waiting tickets, and as a membership card.
On the other hand, if we look at WeChat in China which has been introducing mini apps since 2017, it is mainly used as a social commerce and global brands such as LVMH and NIKE are running EC apps. In addition, various online services like TikTok are also developing services on WeChat, making the app a super-app.
On LINE Mini Apps, we are starting to see apps for sales promotion campaigns. I think we can expect to see more apps targeting the online domain in the future.
In the future, I personally believe that if LINE becomes a super-app with many companies utilizing LINE Mini Apps, the retail world may only need LINE Mini Apps and official LINE accounts, not requiring websites. It may be a near future that everything necessary for daily life can be done through LINE.
Mini App Maker
With the growing interest in LINE Mini Apps, DOTZ has released the “Mini App Maker” in April 2022. Can you tell us about it?
The “Mini App Maker” is a SaaS product that packages the development and operation of LINE Mini Apps and official LINE accounts. It can develop LINE Mini Apps with no code and manage official LINE accounts for ¥5,000/month. At the moment, we believe that it is best suited for SMBs (small and medium-sized businesses), mainly in the restaurant and service industries that operate in actual stores.
There are many companies that develop LINE Mini Apps, but we are able to offer a complete service that includes the management of official LINE accounts because we have many years of experience in managing the official accounts of enterprise companies.
Also, we are working to release “Mini App Maker Pro” in 2023, targeting the middle enterprise market. Since this is paired with scratch development, it is intended for large companies with enough budgets. We hope that IREP, which has many such companies as clients, will be able to cooperate with us. We are aiming to create a LINE Mini Apps no-code platform with the “Mini App Maker” and “Mini App Maker Pro”.
It is interesting to see how we can help with the “Mini App Maker Pro” for the enterprise market. I think there are many possibilities, such as proposing OMO (Online Merges with Offline) using the LINE Mini App as a start.
Synergy of DOTZ x IREP
Both the LINE Mini Apps and official LINE accounts are tools for lead nurturing, and DOTZ’s strength is that DOTZ develops business specifically in that area. In contrast, I believe that IREP’s strength is that IREP has a great deal of expertise in maximizing the effectiveness of lead generation, particularly in Google search.
I believe that by linking the strengths of the two, we can help our clients maximize their sales. What do you think?
I agree that the synergy between the two companies is significant because we have different areas of expertise.
For example, since DOTZ is a marketing support company specializing in LINE, one of our main goals is to increase the number of “friends” of official LINE accounts, and we work on LINE Mini Apps and LINE ads as a means to achieve this.
But it is also important to attract customers through media other than LINE. In fact, there has been a noticeable trend recently of leading customers to LINE via LPs from Google search, Instagram, and display ads. I believe that having IREP, with its expertise of Web customer-attraction, take on the customer-attraction part will create a great deal of synergy.
Also, with the business integration of LINE and Z Holdings in 2019, various data integrations have been taking place and will continue further in the future. With IREP’s strength around SEO, we expect joint operations with LINE utilizing the search aspect.
We are thinking to develop owned media distributed via LINE in the future, and we believe that we can create synergy by combining our strengths, proposing a set of proposals in conjunction with IREP’s SEO consulting services.
We are looking forward to seeing how DOTZ’s other services can also take advantage of our strengths. We look forward to the release of “Mini App Maker Pro”.
Born November 11, 1981 in Fukuoka, Japan.
After working as a designer at a publishing company and in sales at a human resource agency, Hitoshi joined CyberAgent in 2006. In CyberAgent, he worked as the director of its LINE department and CRM department after serving as a planner for various online-shopping companies. Hitoshi increased the sales tenfold in three years at the LINE department and grew the department as the top agency. Leaves CyberAgent in the end of 2019.
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Irep Inc. is an award-winning global digital marketing agency based in the San Francisco Bay Area. Our headquarters are in Tokyo and our network spans more than 20 countries. In Japan, we are ranked No. 1 for performance-based marketing. We also offer highly specialized market entry, as well as integrated marketing and localization services. Since 1997, our data-driven solutions have effectively led our diverse international clientele to continuous success in Japan, Asia, and beyond.