Toyota motor corp.'s vision of Internet marketing goes something like this. A 28-year-old Web user, call him Hiro Suzuki, accesses Gazoo.com, one of his favorite sites. In the past month, he has bought music compact discs and downloaded Playstation2 game software at the Gazoo Media Mall.
After ordering a leather baseball cap from one of the clothing vendors at the Gazoo Shopping Mall, he turns to his real objective: buying a car. At the Gazoo Auto Mall, he looks over the selections, finally deciding on a black Toyota bB. He quickly is linked to a nearby Toyota dealership, which sets up an appointment for him with a salesperson. Two weeks later, he drives off the lot in his new car.
He never notices that Toyota-owned and operated Gazoo did not allow him to look at models from other Japanese carmakers. Gazoo looks like the Internet and acts like the Internet, but it is not the Internet. That distinction may prove even more vexing for other carmakers than for Japanese consumers. Gazoo is by far the most successful Web venture of any Japanese carmaker. General Motors' e-commerce chief Mark Hogan has said he would like to sell GM cars in Japan through Gazoo. It is unlikely that Toyota will allow Gazoo to sell rivals' cars.
So who are Gazoo's rivals? Kosuke Yamamoto is Toyota's executive vice president in charge of Japan market sales and overseas operations. Asked to identify Gazoo's rivals, Yamamoto at first cited Autobytel and Carpoint, two leading automotive Web companies that have set up shop in Japan. Their sites don't sell music or other non-automotive goods, however. Nor is Gazoo like Web portal Yahoo! because it does not allow visitors to find whatever they want, especially if it is a Honda car. So what is the business model?
'Amazon.com started with books but now carries many other items. If I try to think about it, Gazoo may be similar to Amazon.com,' Yamamoto said.
But then, who knows? 'It's still very experimental. The structure of Gazoo is very flexible, and they could carry it in various directions,' said Steve Usher, auto analyst for Jardine Fleming Securities (Asia) Ltd. in Tokyo.
Toyota managers describe Gazoo as a marketing and customer-relations tool aimed at strengthening ties between the carmaker, its dealers and customers. They expect it to generate profits, but its main goal is to help sell cars.
'Toyota provides services throughout the customer's life, centered on the automobile. Gazoo is a part of that,' said Shigeki Tomoyama, general manager of Gazoo.com, which was made a separate division of Toyota early this year. 'My vision is to be the interface on the Net that can support the customer's life in total,' he said. That means improving customer satisfaction, particularly in the area of information technologies and building the customer base for Toyota.
So far, Gazoo is a roaring success. The free service has about 500,000 members and is growing so fast, Toyota projects Gazoo's membership at 4 million in two or three years. Of the members, 43 percent are younger than 30, and more than two-thirds are younger than 40. Of the consumers directed to a dealer by Gazoo, nearly 14 percent buy a vehicle within six months.
The variety of offerings and ease of access to the site draw consumers to Gazoo. Originally, Gazoo offered a limited amount of automotive information: new-car features and prices, trade-in data, maintenance updates and comparisons of financing plans. Gazoo Club supplemented that with chat rooms, weekly horoscopes and a virtual 'Gazoo pet.' The offerings were so basic, early Gazoo brochures boasted that members would enjoy the 'possibility of ordering new car catalogs free of charge.'
Then the goal shifted from providing information, to building brand loyalty, to Gazoo - and Toyota. Car purchases generally are on a five-year cycle in Japan, Tomoyama said. But other vehicle-services providers, such as insurance companies, contact the customer yearly. Moreover, a Toyota Celica owner buys clothing and music even more frequently. 'That's why we decided to expand the categories' available on Gazoo, Tomoyama said.
More than cars
Gazoo offers Gazoo Club plus an Auto Mall, Shopping Mall and Media Mall. A Travel Mall will open this year and a Finance Mall next year. Toyota officials said the latter will focus on auto-related financial products, but Toyota also plans to sell investment trusts - Japan's version of mutual funds - to holders of its 'New Toyota Card.' It likely will market the cards to Gazoo members. By the end of this year, Gazoo should include about 1,000 retailers not related to Toyota.
By 2003, Toyota forecasts each Japanese will spend 150,000 yen, or about $1,430, in Internet transactions. By then, Gazoo's projected 4 million members will be spending an estimated $5.7 billion on Internet purchases. Toyota wants Gazoo to capture a big chunk of that and make a small percentage on each purchase. Toyota forecasts Gazoo's revenues in 2003 will total $444 million. That does not count revenues from car sales, which are booked by Toyota's dealers. Gazoo does not charge for passing consumers on to dealers.
On one hand, that would be small change, a mere 0.6 percent of the $70.5 billion in revenues Toyota projects for the fiscal year that ended March 31, 2000. On the other hand, the real objective is not revenues but loyalty. 'If a customer comes to Gazoo every month, he may purchase about 10,000 yen worth of goods a month. Then, after 60 months, he'll buy a 3 million-yen car. That's the e-commerce vision,' Tomoyama said.
To make that happen, Gazoo is making itself more accessible by placing Gazoo kiosks in public places. By 2003, there will be 13,000 such kiosks in convenience stores, 5,500 in Toyota and Daihatsu dealerships and 1,000 in other locations such as video rental stores.
At Gazoo.com headquarters in an office tower atop Nagoya Station, staffers feverishly are developing a version suitable for i-mode, the mobile phone Internet link that is popular in Japan. The problem is that i-mode's tiny screens don't show the detailed car displays and other graphics Gazoo favors. Still, Gazoo only has been around two years, and Toyota's strategy for it still is evolving. 'Gazoo will grow in the future. For now, it is still just an egg,' Yamamoto said. 'But it's a Godzilla egg.'
You can e-mail Staff Reporter James B. Treece at [email protected]