Word: sakamoto
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...reality Sakamoto's only sin may be that he's smarter than his rivals. By exploiting a loophole in Japan's anachronistic, anticompetitive business rules, the 62-year-old former piano salesman has built Bookoff from a single store into a 700-outlet phenomenon in only 12 years. While nationwide book sales have declined 14% over the past six years, Bookoff's formula of selling secondhand best sellers at bargain rates has been a recession-era boon. In the past fiscal year, Bookoff increased sales 20% to $179 million, making it Japan's ninth largest bookseller. "There was a demand...
...Sakamoto's success is also the root of the publishing mandarins' ire: he took their most potent weapon?their ability to fix prices?and turned it against them. One of the most stubborn vestiges of the Japanese government's protectionist bent is its 89-year-old saihan law, which makes it illegal to sell new books at a discount. The law's defenders spout a host of muddled rationales for preserving it, arguing variously that it promotes literacy or protects copyrights or maintains the intellectual integrity of the nation's literary output. This in a country where...
...saihan law says nothing about used books. So Sakamoto decided to restore those to mint condition and sell them cheap. Bookoff purchases books from customers typically for 10% of their cover price. Then employees clean the covers and sand the page edges (using machines Sakamoto designed) to give them a clean, unthumbed finish. The books hit the shelves at half the original price. Any book not sold after three months is slashed to 100 yen (about 85?). Sellers of new books, along with publishers and wholesalers, are powerless to fight back. By law they can't cut their own prices...
...That kind of customer loyalty has the competition crying foul. In 2000, Hironobu Hamada, a director of Kodansha?Japan's largest publisher?told his shareholders that used-book stores could lead to unfair trade practices. And Tetsuo Okawa, director of the Japan Booksellers Federation, claims that Sakamoto, by purchasing from the public, encourages teens to shoplift books from other retailers so that they can fence them at Bookoff. Sakamoto finds the criticisms a little baffling. "I think we can live peacefully together," he says, "but they keep finding new ways to attack...
...counterattacking on new fronts. Capitalizing on an increasing acceptance of secondhand stores by Japanese consumers, Bookoff is now opening additional outlets offering used clothing, jewelry, toys, furniture and computer hardware. There is no saihan law for those goods, leading Sakamoto's doubters to predict that these ventures will fail. He disagrees, arguing that the company's pricing and distribution know-how and entrepreneurial spirit provide an advantage no competitor can quickly replicate...