Lipson: the mail-order venture with Mitsubishi Corporation (1984)

The assumption that an existing channel can be repurposed

At the centre of this failure is the fact that an asset believed to be a strength did not remain one in a different business. A door-to-door network of 60,000 saleswomen, rare even in Japan, was optimised for a single point — delivering a drink every day — and saleswomen who faced their customers only once a month, at collection time, had little capacity left to carry consultative catalogue selling as well. The reading that efficiency rises when an existing channel is repurposed for a new business does not necessarily hold once the character of that channel is examined closely.

The other thing that remains is that speed and slowness in withdrawal sat side by side. A posture that set a $724.7M (¥100bn) target and took on fixed costs in advance removed any room to correct course while running, and put securing sales ahead of reworking the concept. Even so, calling it off after four years and absorbing a little over $39M (¥5bn) of cumulative losses with the strength of the core business was a decision that kept the wound from spreading. The remark that there is no shortcut in mail order is a point worth returning to whenever a company with an existing customer base steps into a new way of selling.