ZOZO
Corporate History & Strategy

Since establishing Start Today, Ltd. in 1998, Yusaku Maezawa had been expanding mail-order sales of CDs and records. However, around 2000, the spread of the internet raised questions about the sustainability of a paper catalog-based sales model. At the same time, as the business grew in scale, management challenges such as inventory management and fundraising became apparent.

Initially running the business in parallel with his band activities, the growth of the enterprise reached a stage where part-time management was no longer feasible. Facing decisions requiring quality and speed—such as transitioning from paper to EC, investing in new businesses, and relocating headquarters—strengthening the corporate structure beyond a personal business extension became indispensable.

In 2002, Maezawa ended his band activities and decided to devote himself to management. That same year, he reorganized from a limited company to a stock corporation, establishing Start Today, Inc. with capital of 15 million yen and assuming the position of representative director himself. The incorporation was an institutional preparation aimed at improving business credibility and enabling business expansion.

Meanwhile, the capital policy was cautious. Under the harsh funding environment following the dot-com bubble collapse, no external equity was raised, and debt-centered financial management continued. As a result, the equity ratio stood at a low 11.8% as of the end of March 2005, but this was also a choice to maintain management control. On the business side, the company withdrew from paper catalogs to concentrate on EC, and also expanded into the fashion sector.

Continuing to expand through borrowings without capital increases after incorporation was financially fragile, but it served as the foundation for maintaining founder-led decision-making. By specializing in EC, the company reduced paper media costs and accumulated inventory turnover and online sales expertise, which led to the subsequent creation of ZOZOTOWN.

In other words, the period around 2002 was a process of transforming the company's character from a music mail-order business to an internet company, and the incorporation was not merely a change of form but an institutional and financial redesign to concentrate management resources on EC.

Start Today began with mail-order sales of CDs and records and made a complete transition from paper catalogs to EC around 2000. Having a clear customer base of music fans, the company naturally expanded into the fashion domain, which had high cultural affinity. In 2000, it launched the self-purchasing fashion EC site 'EPROZE,' selling products by bearing inventory itself. By assuming inventory risk, the company honed its product knowledge and sense of bestsellers, and also built trust with brands.

Meanwhile, the sites were dispersed by taste and operated across multiple domains. As scale expanded, challenges of unifying the worldview and optimizing traffic efficiency emerged. The concept of reconstructing the operation as a single 'town' rather than a mere collection of online shops took concrete form. A navigation design that allowed cross-brand browsing became necessary, and the stage was set for redesigning the business framework itself.

In December 2004, the existing sites were completely revamped, and the EC mall 'ZOZOTOWN,' which aggregated select shops, was launched. The 17 online brands that had been operated in-house were discontinued and consolidated into a single domain. This was not a name change but a business model transformation. While preserving each brand's worldview, the design was switched to create a unified 'town' as a whole.

Listings were made by screening, adopting a policy of managing the lineup of brands and site design rather than indiscriminately increasing stores. Leveraging the discernment cultivated through the inventory-holding model, the company clarified its position as a fashion-specialized platform. This consolidation became the foundation that later attracted major brands, and ZOZOTOWN began to be recognized not just as an EC site but as a platform where brand value could be maintained.

Having launched ZOZOTOWN in 2004, Start Today was positioning itself as a fashion-specialized EC, but its name recognition within the industry was limited at the time. For brands, the biggest concern was whether they could sell without undermining their own value, making them cautious about listing on an unknown EC mall. In the real store-centric industry, online sales were positioned as a supplementary channel.

Meanwhile, Yusaku Maezawa engaged in dialogue with brands not merely as a distributor but as an entrepreneur with fashion understanding. His approach of designing EC as a venue for expressing worldview rather than a arena for price competition gradually gained appreciation. On this trajectory, the commencement of business with United Arrows in 2005 became a realistic prospect.

In 2005, United Arrows listed on ZOZOTOWN. The contract format was consignment sales, with a system where ZOZO handled product photography, inventory storage, packing, and shipping. This was not mere mall listing but a model that took on logistics and operations as an integrated package, allowing brands to focus on sales and planning.

This deal is said to have been concluded through direct dialogue between Maezawa and Osamu Shigematsu. Following United Arrows' listing, BEAMS and SHIPS also joined, and ZOZOTOWN came to be recognized as a venue where prominent select shops were represented. The enrichment of the brand lineup had the effect of elevating the overall credibility of the site.

As of fiscal year 2005, ZOZO's estimated consignment sales commission was approximately 18%, exceeding the general EC level at the time. This was because the model was a value-added type that encompassed logistics, photography, and inventory management. The structure secured revenue through sales floor quality and operational capability rather than price competitiveness.

Subsequently, with the expansion of promotional investment, the take rate rose, reaching approximately 30% by fiscal year 2011. By achieving both prominent brand participation and high commission rates, ZOZOTOWN established its positioning not as a 'low-price EC' but as a 'high-value-added fashion platform.'

The commencement of business with prominent brands such as United Arrows in 2005 drove rapid expansion of ZOZOTOWN's transaction volume. In the consignment sales model, where the company handles everything from product photography and inventory storage to packing and shipping, logistics processing capacity directly determined competitive strength. Initially, inventory was stored within the headquarters building, but the increase in brands and SKUs made physical limitations apparent.

Furthermore, the differentiating factor from other EC sites was not price but operational quality, making it essential to build a swift and accurate shipping system. To maintain a high take rate, it was necessary to refine logistics not merely as a back-office function but as a source of added value. Thus, the establishment of a dedicated logistics facility emerged as a management priority.

In 2006, Start Today established the logistics facility 'ZOZOBASE' in Narashino City, Chiba Prefecture. The facility was secured through a lease from Prologis, a dedicated warehouse of approximately 1,000 tsubo in floor area. By transitioning from in-office storage to a full-scale logistics facility, the company established the infrastructure supporting EC operations.

At the new facility, a system was built to complete product photography, measurement, data entry, and site listing within one day of receiving goods. Furthermore, operations were established to enable shipping within as little as three hours after receiving an order. By keeping logistics in-house and accelerating it, this was a strategic investment to enhance credibility as a fashion-specialized EC.

The establishment of ZOZOBASE significantly improved inventory processing capacity and shipping speed. For brands, a high-quality logistics system that comprehensively handled photography, measurement, inventory management, and shipping was in place, enabling ZOZO to provide added value akin to 'operational outsourcing' rather than merely serving as a sales channel. This deepened the relationship with brands.

Importantly, this logistics enhancement served as the basis for the take rate increase. The consignment sales commission rose from approximately 18% in fiscal year 2005 to approximately 30% by fiscal year 2011, underpinned by the advancement of integrated operations including photography, storage, and shipping. By positioning logistics as the core of its competitive advantage, ZOZO established a structure that raised profitability while maintaining its high-value-added model.

Around 2010, smartphones—particularly the iPhone—were rapidly proliferating in Japan, and EC browsing environments were beginning to shift from PCs and feature phones to smartphones. The conventional ZOZOTOWN had been designed with a PC-first approach, and mobile support was limited to simplified displays. This posed a risk of losing the primary touchpoint with younger users. However, among domestic internet companies, smartphone proliferation was not regarded as a certainty, and the majority of companies were taking a wait-and-see approach.

Nevertheless, in fashion EC, the browsing experience directly influenced purchasing behavior, and screen design and usability optimization had entered a phase where they affected sales. Unlike the feature phone-centric era, UI design premised on touch operation was required, and smartphone support emerged as a competitive priority.

In December 2010, ZOZO released its iOS app, marking the beginning of full-scale smartphone support. It quickly gained traction, ranking high in the App Store's free app charts, and the company clarified its policy of making smartphones the primary touchpoint. Moving away from the approach of repurposing PC displays, the transition to a smartphone-dedicated UI was advanced.

In 2011, the company invested in Kayac to strengthen its development capabilities and accelerated app improvements. In May 2012, an Android version was also launched, completing support for both OS platforms. This established the infrastructure for transitioning to smartphone-first EC operations and consolidating the next-generation user touchpoint within the company's own app.

In the early 2010s, ZOZOTOWN was expanding its transaction volume through smartphone support and enrichment of prominent brands. The number of listed brands and SKUs continued to increase, and in the consignment sales model where the company handles inventory storage, photography, packing, and shipping, processing capacity was approaching its upper limit. The existing Narashino facility was becoming unable to accommodate future increases in transaction volume.

Furthermore, in fashion EC, delivery speed had entered a phase where it directly influenced customer satisfaction and repeat purchase rates. As competitors advanced their logistics investments, ZOZO also needed to build a system that simultaneously enhanced processing capacity and delivery speed, rather than merely expanding inventory. Logistics was at the stage of being redefined not as a back-office function but as the foundational capability supporting brand value.

In 2013, Start Today expanded its logistics facility in Narashino City, deciding to lease the entire floor of approximately 30,000 tsubo at Prologis Park Narashino 4. Annual rent expanded from approximately 300 million yen to approximately 1.5 billion yen, an investment accompanied by fixed cost burden. This was not a short-term efficiency improvement but a structural investment premised on future transaction volume expansion.

The expansion significantly increased inventory storage capacity and concurrent processing volume, strengthening the integrated operational system from photography, measurement, and data entry through to shipping. By advancing logistics processes, the infrastructure was established to maintain the value-added model that encompassed operational outsourcing functions beyond mere mall operation.

With the new facility operational, a system was built that enabled same-day delivery for approximately 35% of shipments. Following this, in March 2014, a same-day delivery service targeting the Tokyo metropolitan area was launched. For a 500-yen fee, orders placed by 9:00 AM arrived that evening, and orders placed by 9:00 PM arrived the following morning.

The mechanism allowing customers to choose delivery speed was a measure that enhanced convenience in fashion EC. The logistics expansion was not merely a facility enlargement but an investment that expanded the service design itself. It represented a structural turning point in building the processing capacity foundation toward surpassing 100 billion yen in transaction volume.

As of 2018, ZOZOTOWN's core system had been operating for approximately 16 years without a major overhaul, running on a stack centered on VBScript, IIS, and SQL Server. Much of the business logic was concentrated in stored procedures on SQL Server, with no test code in existence—quality was maintained through manual testing by a QA team. While the system had supported growth, it had become constrained in terms of changeability and scalability.

Furthermore, the development structure was not fully in-house but was built through delegation to multiple external vendors. The overall system architecture was fragmented, and the speed of understanding specifications and making improvements was limited. As cloud usage expanded, the rising costs of AWS accounts also became an issue, and the system architecture itself came to be recognized as a management bottleneck.

Additionally, the data analytics infrastructure was insufficiently developed, lacking an environment for cross-cutting analysis of business data. While transaction volume expanded as a fashion-specialized EC, there were limits to the speed of analytics-driven initiative planning and improvement cycles. The system overhaul was evolving from a mere development efficiency issue into a structural challenge that determined business competitiveness.

In response to this situation, ZOZO began system replacement in 2018. Rather than incremental modifications premised on the legacy environment, the company shifted to a policy of reviewing the entire architecture. Instead of life extension premised on technical debt, a fundamental rebuild through redesign was chosen. This decision prioritized medium-to-long-term scalability over short-term efficiency.

In 2020, the engineering organization was restructured, and mid-career hiring was actively pursued to increase the in-house development ratio. By reducing dependence on external vendors, the company transitioned to a structure where product responsibility was consolidated internally. The organization was rebuilt to handle everything from architecture design to operations in an integrated manner, aiming for both development speed and quality.

Simultaneously, BigQuery was introduced as an analytics platform to promote data consolidation and visualization. Fragmented data was integrated, and development of an infrastructure that could be utilized for decision-making was advanced. The pivot was not merely infrastructure renewal but a technology strategy connecting product development and data utilization.

As the replacement progressed, the transition from a previously black-boxed structure to a design philosophy with clear areas of responsibility advanced. The progress of in-house development contributed to improving the speed of feature additions and improvements, acting in a direction that enhanced the autonomy of the development organization. Testing and quality management mechanisms were also progressively established, building a foundation for moving away from person-dependent operations.

The development of the data infrastructure enabled cross-business analytics, advancing the sophistication of inventory turnover and purchasing behavior understanding. In EC business, the quality of data utilization determines competitiveness, so the development of the analytics platform brought structural changes that extended to marketing and product strategy.

Technology foundation renewal is not something that completes in a short period, but ZOZO clearly signaled its transition away from legacy dependence. Following logistics investment, by explicitly positioning technology investment as a core of competitive advantage, the company entered a phase of pivoting from a fashion EC company toward a tech company.

In the latter half of the 2010s, ZOZO had grown into one of Japan's largest fashion EC platforms centered on ZOZOTOWN, but the management structure was highly dependent on founder Yusaku Maezawa. As of the end of March 2018, Maezawa held over approximately 37% of shares as the largest shareholder, with management and capital in an integrated state. Meanwhile, the slowdown of business growth and changes in the market environment became apparent, and how to design the next growth strategy became an issue.

Additionally, Maezawa had pledged a portion of his shares as collateral to financial institutions, and the stability of the capital structure emerged as a discussion point. As the founder's intention to step down became clear, the method of disposing of his large shareholding became a problem directly linked to corporate value. The situation had entered a phase requiring not merely a management transition but capital restructuring involving the transfer of the controlling shareholder.

In 2019, Z Holdings (formed through the business integration of LINE and Yahoo) launched a tender offer for ZOZO shares, announcing a policy to acquire 50.1%. ZOZO accepted this and decided to become a consolidated subsidiary of ZHD. This was not a choice to maintain independent management but a decision that prioritized capital stability and expansion of growth opportunities.

Simultaneously, the company chose to maintain its listing, accepting the parent-subsidiary listing format. The founder stepped down, and Kotaro Sawada, promoted from within, assumed the presidency. While overhauling the management structure, a framework was adopted that maintained a certain degree of autonomy in brand and business operations. While capital shifted to ZHD, the design kept business expertise within ZOZO.

By coming under the ZHD umbrella, ZOZO resolved the uncertainty on the capital side and gained an environment more conducive to long-term investment decisions. Amid intensifying EC competition, rather than fundraising and making investment decisions independently, the company chose to leverage group resources. This opened up scope for collaboration in areas such as logistics, systems, and advertising.

On the other hand, the parent-subsidiary listing structure also contained new issues regarding the relationship with minority shareholders. The transition from an independent company to a group company was also a process of redefining the balance between management freedom and capital efficiency. The most significant structural change at this point was the shift in positioning from a founder-led structure to a specialized operating company under a holding company.