Sagawa started distribution of Xtag solution by Lisuto

PartnershipsEcommerceTagging
By Pavel Zaslavsky, Jul 18,2021

In June 2021, Sagawa started distribution of Xtag solution provided by Lisuto branded as "Smart AI Tagger". With services provided initially in the Tokyo area, Sagawa plans to expand the services throughout Japan during the summer of 2021. Sagawa’s cooperation with Lisuto follows a business partnership that started in April.


Sagawa Express, a subsidiary of SG Holdings (HD), has begun offering services for tagging product features on its site to ecommerce businesses. Product tags make it easier to search for products on marketplaces and increase sales opportunities. Due to the Covid-19 pandemic, the popularity of Ecommerce is quickly rising, and in the next two years Sagawa Express plans to engage with major retailers, operating over 50,000 online stores, to provide them with tagging services. 


In June 2021, Sagawa started distribution of Xtag service provided by Lisuto branded as "Smart AI Tagger". While the average monthly fee is around 500 USD per company, it is expected that large companies that operate numerous online stores will invest thousands of dollars into the solution. With services provided initially in the Tokyo area, Sagawa plans to expand the services throughout Japan during the summer of 2021. Sagawa’s cooperation with Lisuto follows a business partnership that started in April.


The AI tagger uses Lisuto’s proprietary AI technology to identify the attributes of products and automatically tag them with the proper tags. The AI tagger automatically recoginzes product features like "brand", "color", "size","product type" and many others and assigns a proper marketplace  "tag" that corresponds to these features.


While tagging products manually may take several minutes for each product, Smart AI tagger allows sellers to analyze and tag 1,000 products in under 5 minutes, which dramatically improves work efficiency.


According to the surveys, almost all online shopping users begin their shopping with a search, and almost 70% of them continue to use filters. Many users browse only the products they are looking for. Using products tags also improves the performance of proximity algorithms, showing similar products to the ones the user was originally looking for. By improving product tagging, sellers increase exposure and click rates, which leads to increase in sales.


Online stores that have used the Smart AI tagger before have shown sales increase of several tens of percent. Smart AI tagger service was launched initially in 2019 and is currently in use by over 100 companies. Lisuto aims to expand its business in partnership with Sagawa, which maintains a strong delivery network for Japanese domestic ecommerce.


Sagawa also stands to profit from the cooperation with Lisuto. The Japanese ecommerce market is dominated by the Rakuten Group, Amazon Japan, and Yahoo. For Sagawa, whose challenge is to strengthen cooperation with ecommerce businesses, the introduction of the Smart AI tagger will address the market dominated by the three major companies. The solution offered by Sagawa and Lisuto is immediately applicable to 150,000 online stores, and in the next two years, 50,000 additional stores will be able to benefit from it.  


Ecommerce’s market share continues to increase due to the stay-at-home regulations of the Covid-19 pandemic. According to the Japanese Ministry of Economy, Trade and Industry, the size of the domestic consumer ecommerce market in 2019 increased by 7.7% from the previous year to 174.25 billion USD, and by 52% from 2014 (114.7 billion USD). In 2020 Sagawa shipped a record number of 1.403 million products, however, it may have broken this record again recently. 


Japan has a relatively lower ecommerce penetration rate than Europe and the United States. The top executives of several logistics companies believe that "the use of ecommerce by Japanese consumers will take root due to the effects of the Covid-19 pandemic." Sagawa intends to capture the demand of shippers by selling not only shipping services but also a system that improves the convenience of ecommerce sites.


An executive at Sagawa commented, "We can expect to improve the business efficiency of ecommerce businesses and improve access to products. We believe that we can contribute to increasing sales."

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