Oisix ra daichi 3182
オイシックス・ラ・大地
Recent Updates
2022-05-13
2022-02-28
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Gate City Osaki East Tower 5F 1-11-2 Osaki, Shinagawa-ku, Tokyo
Summary
Oisix ra daichi is an online and catalog retailer specializing in the sale and delivery of fresh food products and ingredients. The company takes pride in offering products that are safe, delicious, and of high added value, including organic vegetables, specially cultivated agricultural products, and additive-free processed foods. It says its business concept goes beyond a simple food delivery service as it aims to provide solutions to bring more value to customers’ dining tables once the products are delivered to their homes.
Internet & Direct Marketing Retail
Key dates
2019-06-24
Coverage initiation
Executive summary
Business overview
Food subscriptions: Oisix ra daichi Inc. is an online and catalog retailer specializing in subscription sales and delivery of fresh food products and ingredients. The company takes pride in offering products that are safe, delicious, and of high added value, including organic vegetables, specially cultivated agricultural products, and additive-free processed foods. It says its business concept goes beyond a simple food delivery service as it aims to provide solutions to bring more value to customers’ dining tables once the products are delivered to their homes. It had about 417,000 subscribers (customers) across its three domestic home delivery businesses (Oisix, Daichi wo Mamoru Kai, and Radish Boya) at end-March 2021 (versus 339,000 a year earlier) and recorded FY03/21 consolidated sales of JPY100.1bn (+40.9% YoY).
Business model: In contrast to the typical e-commerce website, where the majority of sales are accounted for by one-off purchases, most Oisix ra daichi customers are subscribers to a weekly home delivery service. Each week, customers can add or delete items as necessary from a recommended list of products found in their shopping carts. Because the orders received from customers are then passed along to producers, the company can usually avoid holding inventories at its distribution centers (with the exception of items that have long shelf lives and can be easily handled), allowing it to keep spoilage costs below those of other sellers (including online supermarkets and brick-and-mortar retailers). For last mile delivery, the company uses Yamato Transport (which allows customers to specify delivery times) and chartered trucks that run on scheduled delivery routes. The company sources exclusively from producers (farmers) and processed food manufacturers that fulfill its safety and quality standards, so both purchase and sales prices are in the premium range. Its gross profit margin is about 50%.
Key performance indicators (KPIs): Core KPIs are the number of subscribers, order size, and purchase frequency (per-customer order count over a given period), with the number of subscribers having the greatest effect on sales growth. Customer spending per order is relatively stable due to the presence of a minimum order amount for free delivery while purchase frequency is generally determined by the lifestyles of the target customer base. Growth in the number of subscribers is affected by the amount the company spends in advertising. The company has three brands—Oisix, Daichi wo Mamoru Kai (Daichi), and Radish Boya, which are managed as individual segments. The segment profit to sales ratio, before advertising expenses is about 20% for all brands. Segment profit is defined by the company as “sales minus costs that can be linked to each business segment.”
Growth driver and sales growth targets by brand: A growth driver for the Oisix brand is the popularity of the Kit Oisix meal kit among customers seeking to save time in meal preparation. Kit Oisix meals are also attractive and photograph well for posting on social media. The company’s basic strategy in the short term is to communicate the safety, security, and convenience of Kit Oisix to acquire new customers. The growth rate of different brands varies depending on the stage that particular business is in; for its growth driver Oisix brand, the company hopes to see sales continue to grow at 15–20% per annum. For the Daichi wo Mamoru Kai (Daichi) and Radish Boya brands, it expects annual growth rates running at least 7–8% in the long term.
Brands, customers, business segments: The name Oisix ra daichi combines the names of Oisix, Radish Boya (merged October 2018), and Daichi wo Mamoru Kai (Daichi; merged October 2017). Main customers for Oisix are in their 30s and 40s, late 50s or over for Daichi, and 40s and 50s for Radish Boya. Because the different brands target different customer needs, the company is able to successfully differentiate them and aims to maintain all three brands while at the same time pursuing synergies in marketing and fulfillment. The company reports four business segments–the home delivery businesses of Oisix, Daichi, and Radish Boya, and the Other businesses segment, which includes retail stores. Subscriber counts at end-March 2021 were 309,000 for Oisix (+28.8% YoY), 45,000 for Daichi (+22.0% YoY), and 63,000 for Radish Boya (+10.2% YoY).
Push into US market: In April 2019, the company announced it would acquire US-based Three Limes Inc., which runs a vegan meal kit home delivery service under the brand name Purple Carrot. The company is looking to accelerate growth at Purple Carrot with the application of the management expertise it has built up in the meal kit subscription business through its operation of Oisix, Daichi, and Radish Boya. At the same time, it is using the recipes developed by Purple Carrot as the basis for selling vegan meal kits in Japan through its Kit Oisix meal kit service. Starting with FY03/22, Oisix ra daichi will disclose data on Purple Carrot as an independent segment.
Main competitors: Having acquired Daichi and Radish Boya, Oisix ra daichi does not compete with any large domestic companies in the premium price range. Businesses such as consumer cooperatives, supermarkets, online food retailers, and convenience stores are not direct competitors in all respects, as each has its own appeal depending on the consumer’s particular situation and budget. Overseas, HelloFresh SE (Frankfurt Stock Exchange [Prime Standard]: HFG) pursues a similar business model and reported FY12/20 sales of EUR3.8bn (JPY500bn; +107% YoY), a marginal profit margin of 28.2% (versus 28.7% in FY12/19), an adjusted EBITDA margin of 13.5% (versus 2.6% in FY12/19), and marketing cost-to-sales ratio of 12.4% (22.3% in FY12/19) (Source: HelloFresh reporting materials for Q4 FY12/20). HelloFresh entered the Japanese market in 2021. As of February 2022, it was providing service only in a limited area for the purpose of monitoring prior to full-scale launch.
Trends and outlook
In FY03/22, the company posted full-year sales of JPY113.5bn (+13.4% YoY), operating profit of JPY4.2bn (-44.1% YoY), EBITDA of JPY6.2bn (-30.2% YoY) and net income attributable to owners of the parent of JPY2.7bn (-45.8% YoY). In Q4, the drop in sales due to issues accompanying the relocation of its new Oisix distribution center came to about JPY1.0bn (less than the roughly JPY1.5bn the company flagged when it revised its forecast on February 10, 2022). As a result, sales came in roughly JPY400mn and EBITDA approximately JPY710mn above the revised forecast. In Q4, ARPU for all three brands was down 7–8% YoY (up roughly 5% versus pre-pandemic levels). This reflected lifestyle changes, including increased opportunities to go out.
Company forecast for FY03/23: The company’s FY03/23 forecast calls for sales of JPY120.0bn (+5.7% YoY), operating profit of JPY4.5bn (+7.9% YoY), EBITDA of JPY6.5bn (+4.6% YoY), net income attributable to owners of the parent of JPY2.5bn (-8.3% YoY), and EPS of JPY68.41. The forecast factors in the possibility of slowing subscriber growth in the domestic B2C subscription offering in the post-pandemic environment and that ARPU may decline to pre-pandemic (FY03/19) levels. The company has a cautious program to improve margins at the new distribution center. For Purple Carrot (in the US), the company factored in a decline of JPY2.0bn in sales due to falling subscriber count in the post-pandemic environment and a fall of JPY1.5bn in EBITDA due to lower sales and lower margins due to inflation.
Medium-term business plan: The company has not announced its future outlook in the form of a medium-term business plan. The company stated in its results briefing materials for FY03/21 that it targets an EBITDA margin of 10% by end-FY03/24 (up about 4% points from its level in FY03/21 excluding temporary factors).
Strengths and weaknesses
Shared Research sees the company’s strengths as its relationships with producers and manufacturers that provide access to a stable supply of quality food, a unique distribution network that connects producers with consumers, and product development that addresses latent consumer needs with such offerings as Kit Oisix.
Weaknesses in our view are the difficulty of having the value of organic food recognized by consumers who are satisfied with supermarket-quality food, the company’s focus on both safety and convenience, which pushes up prices and limits the market, and the tendency of prices that include delivery charges to jump in tandem with rises in distribution costs.
Key financial data
Recent updates
Revisions to full-year FY03/22 earnings forecast
On February 10, 2022, Oisix ra daichi Inc. announced revisions to its full-year FY03/22 earnings forecast.
Revision of full-year FY03/22 forecast (February 10, 2022)
Reasons for revision
The full-year FY03/22 forecast announced on May 13, 2021, assumed that the number of COVID-19 cases would dwindle, resulting in a drop in demand for food delivery services. However, through cumulative Q3, the impact of the pandemic continued, and demand for food delivery services remained firm. As a result, the number of subscribers and ARPU (average monthly spend per customer) increased more than previously assumed, particularly in the domestic home delivery business, and the company now expects sales to exceed the previously announced forecast.
However, it expects profit to fall short of the previous forecast due to lost profit arising from issues it announced on January 24, 2022, as having been encountered during the relocation to its new Oisix distribution center. The company notes that it has been able to complete product deliveries without delay from the Oisix distribution center since January 25, 2022.
Regarding trouble during relocation to new distribution center (occurring in Q4)
In January 2022 (falls into Q4), there was trouble during relocation to the new Oisix distribution center. The company had been moving forward with its plan to relocate to the new distribution center ahead of initial schedule to expand shipping capacity for the Oisix business in response to a surge in food delivery demand. During major relocation operations that took place on January 18, 2022, delays occurred in the receipt of goods, including for inventory relocation, and in subsequent warehouse operations. As a result, from January 18 to 24, for room-temperature and refrigerated Oisix, ISETAN DOOR, and d-meal kit products scheduled to be shipped from the new center, the company faced such issues as inventory shortages and shipping delays and cancelations.
Expected impact in Q4
As of February 10, 2022, Oisix ra daichi expected the aforementioned issues to have negative impacts of JPY1.5bn on sales and JPY1.5–2.0bn on profit in Q4 FY03/22. Breaking down the impact amounts, the trouble itself is likely to have negative impacts of JPY500mn on sales and JPY800mn–1.1bn on profit, with further impacts of JPY300mn on sales and JPY500–700mn on profit for a recovery period and JPY700mn on sales and JPY200mn on profit due to the suspension of promotions. These amounts include the estimated impact related to ISETAN DOOR and d-meal kit products scheduled to be shipped from the new Oisix distribution center. They do not include the impact of lost sales and profit in FY03/23 and beyond due to lost subscriber acquisition opportunities.
In more concrete terms, Oisix expects the issues to have a negative impact of JPY500m on sales due mainly to lost opportunities caused by delivery cancelations and inventory shortages. In terms of profit, in addition to lost opportunities, the company expects to incur JPY600–800mn in loss due to the granting of loyalty points to customers affected by the issues and to higher logistics and labor costs and JPY200–300mn in loss on procurement costs for products that end up being discarded. During the recovery period, it expects a negative impact of JPY300mn on sales due to a decline in spend per order in response to restrictions on the number of items, mainly long tail products. In addition to the decline in spend per order, there will also be increases in logistics, labor, and disposal costs associated with ongoing irregular operations, leading to loss of JPY500–700mn.
Oisix expects the suspension of promotions to have a negative impact of JPY700mn on sales and JPY200mn on profit due to reduced subscriber acquisition efficiency with a suspension of new acquisitions and reduced machine learning frequency associated with the suspension. However, the impact of the suspension of promotions does not include the impact of a suspension of advertising spending. The company explained that it planned to take the portion of advertising expenses it would have used if the suspension had not occurred and use that amount by end-Q4.
In terms of KPIs, the opportunity to add some 15,000 Oisix subscribers was lost in Q4. The churn rate for existing Oisix subscribers increased during the trouble to roughly 1.3x the normal level, but then gradually returned almost to the normal level. The company said the impact of the cancelations was fairly minor, while the slowing of subscriber acquisition due to the suspension of promotions had a greater impact.
As for ARPU in Q4, the company expects purchase frequency to decline as a result of order cancelations during the trouble and temporary restraint on orders thereafter, and spend per order to decline due to inventory shortages during the trouble and restrictions on the number of items thereafter. Purchase frequency had largely recovered by the time of the Q3 results announcement, but the impact that restrictions on the number of items has on spend per order is not likely to disappear until near end-Q4.
Causes of the issues and their resolution
The company moved forward its plan to relocate to the new distribution center by two years in response to a surge in food delivery demand during the COVID-19 pandemic. It compressed the time frame for relocation and transferred roughly 60% of inventory all at once in the final phase. This was an indirect cause of the issues that arose. Although the system itself functioned as expected, the large inventory transfer in the final phase triggered shipping delays and concentrated arrival of goods. This caused confusion in subsequent warehousing and inventory management, which in turn led to confusion later in shelving, order picking (boxing), and shipping processes. Regrettably, by having only the final phase involve such a large inventory transfer, the company failed to perceive that such problems could occur.
In addition, the company's efforts to improve the efficiency of its distribution system resulted in amplifying the trouble. If there was insufficient stock on the shelves to conduct order picking, the company would first request that the shelves be restocked, rather than starting the picking process with shortages present. This would have led to more efficient operations under normal conditions, but since there was confusion about the shelving process, it only led to a situation where orders piled up when they could not be picked according to the ordinary system.
To remedy the situation, the company decided to change its operations to allow picking and shipping of shelved inventory even when the full range was not stocked, helping to eliminate the backlog at the outlet (shipping) side. It also made a decision to temporarily accept cancelation of some orders and divert human resources to clearing the backlog at the entrance (warehousing and inventory management). As a result of these measures, backlogs were cleared at both the entry and exit points, and within a week of the start of the trouble, the situation had improved to the point that shipping delays and order cancelations could be avoided, although some additional human resources were needed.
Prospects for recovery
Oisix ra daichi said any lingering impact of the aforementioned issues should disappear by end-FY03/22, and productivity improvement efforts should recover to the planned cost level during 1H FY03/23. As a result, the company expects FY03/23 sales and EBITDA to be higher even than they would have been in FY03/22 had the issues related to relocation of the distribution center not occurred in the first place. In addition, it plans to use this incident as a lesson to prevent recurrence during any future distribution center relocation work and to ensure flexibility in operations and systems under special conditions such as heavy snowfall.
In Q4, the company usually expands promotions for the spring season, when people in Japan tend to start their new lives (with new school years, new jobs or transfers, and so on). From mid-February 2022 onward, Oisix ra daichi will air TV commercials and increase its placement of online ads. In addition, it will launch a new frozen foods service called Patto Oisix on February 24 and run a four-week campaign in which it will cover related fees. The company aims to increase ARPU by enhancing sales of frozen foods that can be delivered stably from distribution centers other than its new distribution center.
Trends and outlook
Quarterly trends and results
Note: Figures may differ from company materials due to differences in rounding methods.
Note: Profit forecasts for individual segments represent the company’s initial forecasts. Profit figures for individual segments are marginal profit before deducting goodwill amortization (defined by the company).
Notes: In Q1 FY03/20, the company revised the definitions of its KPIs for FY03/19 onward. This has resulted in the loss of continuity with data after FY03/18. Subscribers of the Chanto Oisix plan have been excluded from the Kit Oisix subscriber count starting with Q1 FY03/22, and data for previous years have been adjusted retroactively on the same basis.
The number of Oisix subscribers has been increasing because of a steady rise in customers purchasing Kit Oisix (226,594 at end-March 2022, +24.6% YoY), with new customers attracted by meal kits. Chanto Oisix plan subscribers have been removed from KPIs from FY03/22. The number of subscribers increased sharply in Q1 FY03/22 as a result of successful spring promotions. The high rate of increase is in part due to the fact that the company had to curtail promotions in Q1 FY03/21 because of the capacity constraints at that time.
Oisix was impacted by the loss of subscribers in Q2 and Q3 FY03/22, because the company implemented withdrawal procedures for low-usage customers. The decline in subscriber count had no impact on sales. In Q4 FY03/22, issues accompanying the relocation of its distribution center emerged, and lost opportunities due to the suspension of new subscriber acquisition comprised the loss of roughly 10,000 potential subscribers, and a temporary increase in churn of about 5,000.
In Q1 FY03/21, the number of subscribers and ARPU increased sharply YoY for all three businesses due to the surge in home delivery demand in the wake of the COVID-19 pandemic. Demand for home consumption remained strong from Q2, but as consumers became more accustomed to “living with COVID-19” as time passed since the start of the pandemic, the growth in home delivery demand seen in Q1 stabilized and the sharp YoY growth in ARPU subsided in stages. The pace of new subscriber growth also subsided.
Purchase frequency is on the rise at Oisix, due partly to the effects of a customer success program for new customers, and partly to the popularity of an all-you-can-drink dairy service (this service formerly known as Prime Pass provides fruits and vegetables at a discount and allows subscribers to choose three dairy or egg items per order for a flat monthly fee).
Progress toward initial forecasts at the three home delivery businesses in FY03/22 was slower than in FY03/21, which benefited from the spread of COVID-19, but faster than in FY03/20.
In a typical year, the rate of progress for sales toward initial full-year forecasts tends to rise in Q3. Furthermore, spend per order tends to be higher in Q3 (October–December) than the rest of the year because of sales of products with a high unit price including Christmas-related items, nabe (hotpot) dishes that are mainly consumed in winter, and osechi (traditional New Year cuisine).
Full-year FY03/22 results
Overview
In FY03/22, the company posted full-year sales of JPY113.5bn (+13.4% YoY), operating profit of JPY4.2bn (-44.1% YoY), EBITDA of JPY6.2bn (-30.2% YoY) and net income attributable to owners of the parent of JPY2.7bn (-45.8% YoY). In Q4, the drop in sales due to issues accompanying the relocation of its new Oisix distribution center came to about JPY1.0bn (less than the roughly JPY1.5bn the company flagged when it revised its forecast on February 10, 2022). As a result, sales came in roughly JPY400mn and EBITDA approximately JPY710mn above the revised forecast. In Q4, ARPU for all three brands was down 7–8% YoY (up roughly 5% versus pre-pandemic levels). This reflected lifestyle changes, including increased opportunities to go out.
The company boosted the number of subscribers to its Oisix Club home delivery service from 308,899 at end-FY03/21 (end-March 2021) to 346,083 at end-FY03/22 (end-March 2022). Lost opportunities due to the suspension of new subscriber acquisition due to issues accompanying the relocation of its distribution center comprised the loss of roughly 10,000 potential subscribers and a temporary increase in churn of about 5,000.
Of the roughly JPY13.4bn YoY increase in consolidated sales, JPY8.7bn came from the company's three domestic home delivery services. New subscribers added roughly JPY13.0bn, while reduced ARPU took away about JPY4.3bn. Issues accompanying the relocation of its distribution center reduced sales by about JPY1.0bn. Purple Carrot accounted for roughly JPY1.3bn of the increase and Other businesses added JPY4.4bn.
EBITDA was down about JPY2.7bn YoY, mainly because the company cut back on promotions (investing for growth) in 1H FY03/21 due to logistics capacity constraints at Oisix. Issues associated with the relocation of the distribution center reduced EBITDA by JPY1.3bn. EBITDA rose by about JPY1.7bn at the company's three domestic home delivery services (excluding growth investments). This broke down to an increase of roughly JPY2.6bn YoY from new subscribers and a reduction of about JPY900mn from lower ARPU. The increase in growth investments reduced EBITDA by about JPY3.1bn (including JPY2.8bn from additional PR spending by its three domestic home delivery services). In Purple Carrot and Other businesses, EBITDA was up roughly JPY100mn YoY. Higher fixed costs reduced EDITDA by about JPY100mn.
The company’s FY03/23 forecast calls for sales of JPY120.0bn (+5.7% YoY), operating profit of JPY4.5bn (+7.9% YoY), EBITDA of JPY6.5bn (+4.6% YoY), net income attributable to owners of the parent of JPY2.5bn (-8.3% YoY), and EPS of JPY68.41. The forecast factors in the possibility of slowing subscriber count growth in the domestic B2C subscription offering in the post-pandemic environment and that ARPU may decline to pre-pandemic (FY03/19) levels. The company has a cautious program to improve margins at the new distribution center. For Purple Carrot (in the US), the company factored in a decline of JPY2.0bn in sales due to falling subscriber count in the post-pandemic environment and a fall of JPY1.5bn in EBITDA due to lower sales and lower margins due to inflation. For details regarding the assumptions behind the earnings forecast, please refer to Company forecast for FY03/23 following.
Company forecast for FY03/23
Full-year FY03/23 company forecast (out May 12, 2022)
The company’s FY03/23 forecast calls for sales of JPY120.0bn (+5.7% YoY), operating profit of JPY4.5bn (+7.9% YoY), EBITDA of JPY6.5bn (+4.6% YoY), net income attributable to owners of the parent of JPY2.5bn (-8.3% YoY), and EPS of JPY68.41.
The forecast factors in the possibility of slowing subscriber count growth in the domestic B2C subscription offering in the post-pandemic environment and that ARPU may decline to pre-pandemic (FY03/19) levels. The company has a cautious program to improve margins at the new distribution center. For Purple Carrot (in the US), the company factored in a decline of JPY2.0bn in sales due to falling subscriber count in the post-pandemic environment and a fall of JPY1.5bn in EBITDA due to lower sales and lower margins due to inflation.
The company forecasts subscriber count of 511,000 (an increase of 54,000 YoY) in the three domestic home delivery services, including 398,000 for Oisix (up 52,000 YoY), 43,000 for Daichi (down 2,000 YoY), and 70,000 for Radish Boya (up 5,000 YoY).
Segment forecasts
Note: Profit forecasts for individual segments represent the company’s initial forecasts. Profit figures for individual segments are marginal profit before deducting goodwill amortization (defined by the company).
Company forecasts versus results
Since the company’s sales mainly come from subscription services, the difference between initial sales forecasts and results tend to be small. In FY03/21, sales were much higher than the company’s initial forecast due to a significant increase in both the subscriber count and ARPU as a result of at-home demand caused by the COVID-19 pandemic. On the profit front, in addition to the effect of the increase in the subscriber count, improved delivery efficiency due to the rise in ARPU led to an improvement in profit margins, and profits at each level also comfortably outstripped the company’s initial forecast. In FY03/22, profit at all levels came in under the company’s initial forecast due to problems associated with the relocation of its distribution center.
Medium-term outlook
Oisix ra daichi does not currently disclose a medium-term business plan. We have outlined the company’s thinking on strategy conveyed during our interviews with management as follows. For information about the short-term actions, please refer to the “Quarterly trends and results” or “Full-year FY03/22 company forecast” sections. The company stated in its results briefing materials for FY03/21 that it targets an EBITDA margin of 10% by end-FY03/24 (up about 4% points from its level in FY03/21 excluding temporary factors).
Long term vision
The company says it wants to go beyond operating a simple food delivery service, becoming instead a company that enriches consumer lifestyles by helping to create a more fulfilling dining experience after the delivery is made by providing safe, delicious, and high value-added food products. In keeping with this aim, it intends to keep the focus on food-related products and is not thinking about establishing a full-scale business dealing in daily-use goods or any other products outside of foods.
Because the company deals in premium-priced food products, both as a buyer and a seller, the majority of its customers at this time are in upper-income households that can pay premium prices. Over the long term, however, the company would like to expand its customer base outside the upper-income household demographic. The company noted that online sales of food, beverages, and liquor still account for only 2.89% of nationwide retail sales in this category (according to the FY2019 International Economic Research Project for the Development of an Integrated Domestic and International Economic Growth Strategy [E-Commerce Market Survey]), but that it expects the proportion of sales accounted for by e-commerce in this area to rise over the long term and eventually reach roughly the same level as other product categories.
While the growth rate of its different brands varies depending on the stage that particular business is in, at the Oisix brand, its growth driver, the company hopes to see sales continue to grow at about the same pace it has seen in recent years, or 15–20% per annum. At the Daichi and Radish Boya brands, it will first focus on creating new products and services that better meet customer needs and have sales move into a second growth stage, after which it expects annual growth rates running 7–8% or above in the long term.
Expanding business domains
The domestic home delivery businesses were the mainstay in the past, but in recent years Oisix ra daichi has started full-scale advances into other business domains, including domestic brick-and-mortar retail sales and overseas home delivery businesses. It is looking to continue expanding its presence in all three of these business domains. The main pillar of earnings growth is the food home delivery business.
The company said it is still undecided as to whether it would try to develop multiple brands in the US, but did not dismiss this as a possibility at some point in the future. The company has a locally incorporated subsidiary in Hong Kong and another in Shanghai, China. Yet while believing the Chinese market has great growth potential, the company said it will be quite some time before it is able to grow its business in the Chinese market.
With respect to future mergers and acquisitions, the company said it would consider opportunities like Purple Carrot, where it can leverage its expertise in subscription delivery services and generate synergies, and like DEAN & DELUCA, with strong attributes it did not already possess that would allow it to expand its presence in a particular business domain. It said it would also consider companies with functions it does not possess (e.g., engineering and design companies). In all of these cases, the company said its focus would not be on the growth rate shown by reported earnings but rather on cash flow, and whether the acquisition would return at least as much cash flow as its investment criteria require. For expansion into businesses with strong attributes it does not already possess, the company said it will not be able to handle multiple projects simultaneously, and that it plans to gradually expand the business formats.
The company in February 2021 announced a capital and operational tie-up with AP Holdings (TSE1: 3175) and the acquisition of a 51% stake in Toyoichi Co., Ltd. (formerly Seven Work), a marine products wholesaler operating under AP Holdings. The stock acquisition is somewhat different than M&A activity conducted by the company in the past, reflecting its expanded scope for M&A. The acquisition of businesses positioned upstream in its existing businesses will enable the company to secure fresh marine product purchasing channels free from intermediaries, thereby increasing the value of the marine products category in the home delivery business while also reducing costs. The company has indicated that it plans to hire 20 leadership candidates for the promotion of new businesses, including overseas businesses and alliances, by March 2022.
Brand lineup
In addition to Oisix, the company acquired Daichi wo Mamoru Kai (Daichi) in an absorption-type merger in October 2017 and in February 2018 acquired Radish Boya, making it a consolidated subsidiary. With these acquisitions, the company now has a total of three domestic brands. In contrast to its mainstay Oisix brand, which targets customers in their 30s and 40s, the Daichi brand targets users in their late 50s or older, while Radish Boya targets users in their 40s and 50s. The company is able to successfully differentiate these brands and aims to maintain all three, through which it can offer subscription services designed to meet the needs of each age group, while at the same time pursuing synergies in marketing, fulfillment, and other areas. We would note that Radish Boya was operating in the red before Oisix ra daichi acquired it in February 2018, but has since moved into the black thanks to the application of Oisix ra daichi’s KPI-focused management system and the resulting improvement in profit per delivery.
Near-term strategy
The growth of the Oisix brand is driven by the popularity of its Kit Oisix meal kits among customers looking to save time in meal preparation and who therefore value the kit’s convenience. Kit Oisix meals are also attractive and photograph well for posting on social media, which is another reason they enjoy a good reputation among customers. The company’s basic strategy in the near term is to go after new subscribers, basing its appeal on safety and security and high level of convenience offered by its Kit Oisix meal kits, as well as helping to reduce food loss.
Targets for key performance indicators
Number of subscribers
The company will focus particularly on increasing its subscriber count.
Spend per order
Because the spend per order is influenced greatly by the minimum order size needed to qualify for free delivery, the company is looking to keep the value near the current level.
Purchase frequency
The company would like to see the purchase frequency (number of orders placed by a subscriber during a given period) increase a bit more.
Measures to improve the EBITDA margin
The company stated in its results briefing materials for FY03/21 that it targets an EBITDA margin of 10% by end-FY03/24 (up about 4% points from its level in FY03/21 excluding temporary factors). Its main measures toward this end are unchanged from before. The improvement of the margin in this context is the effect across all businesses, and the degree of margin increase would vary between brands. For example, the effect of the new distribution center will only impact the Oisix brand.
Cost improvement by accelerating the transition to private brands (to improve segment profit margin by 1.0–3.0pp)
The company seeks to lower product costs and strengthen the upstream processes of the supply chain (manufacturing and development) by promoting automation of meal kit and salad kit manufacture and bringing processes such as meat processing and repackaging of fruits and vegetables in house. The company plans to focus on bringing meat processing in house, which should make a significant cost reduction impact and offers scope for further quality improvement, targeting an in-house processing ratio of 70% by end-FY03/21 from the current 30% or so. It plans to begin this initiative in FY03/21. The company anticipates synergies created by the abovementioned acquisition of Toyoichi Co., Ltd.
Reduction of operational costs by new Oisix Distribution Center going onstream (to improve segment profit margin by 1.0pp)
The new distribution center will be used by Oisix and the Solution Business. Full-scale operation began in January 2022, which the company expects will effectively triple shipment capacity versus FY03/20. The company also plans to promote automation within warehouses. Since 2H FY3/22 will be a transition period, the profit margin will temporarily decline due to the cost of running parallel operations and shifting inventory between distribution centers. From FY03/23 onward, however, the company expects logistics costs to fall as operations are centralized.
Encouraging customers to use multiple subscription services (to improve segment profit margin by 0.3–0.5pp)
The company is encouraging customers to use multiple subscription services (e.g., Oisix subscriber occasionally adds a vegan plan to Kit Oisix) to increase spend per order and reduce the ratio of overheads (operational expenses) to sales. Whereas the previous focus was on increasing SKU, it has changed its policy due to shipment capacity constraints.
Improving distribution of supplies through VegeNeco Project (to improve segment profit margin by 0.5–1.0pp)
Distribution costs from producer to the company is part of product cost. In the past, producers organized their own shipments, which incurred labor and cost for both parties. Oisix ra daichi is considering a joint project with Yamato Transport to centralize shipments at Yamato Transport to streamline the logistics process from producer to the company. A pilot joint collection program confirmed that procurement and delivery cost savings were possible. The project began in earnest in Q4 FY03/20, and is expected to be a long-term endeavor.
Capex
The company opened its new Ebina distribution center in September 2021 to expand shipment capacity of Oisix. This capex plan was scheduled before demand increased in response to the spread of COVID-19. In January 2022, the center began full-scale operation.
It announced a public offering of new shares in March 2020 and received payments in April and May with estimated net proceeds of up to JPY4,548mn. Of this amount, JPY3,560mn has been budgeted for investment spending on the company’s new Ebina distribution center and computer systems, with this spending expected to be completed by October 2021. Another JPY880mn has been budgeted for upgrading core systems, including upgrades of the core system platform for the Radish Boya business; this investment spending is expected to be completed by March 2023.
When it released its Q1 FY03/22 earnings results, the company also announced that it would invest about JPY4.0bn to expand its freezer facilities. It plans to triple its frozen shipment capacity versus FY03/21, with the new facility starting operation in fall 2023.
After consolidating its frozen goods operations, which differ from its handling of refrigerated goods, the company will consider opening a distribution base in western Japan to strengthen business continuity planning (BCP). However, it said that the opening of a distribution center in western Japan is a long-term consideration issue and will be scheduled as capex in or after FY03/25. The company has not yet settled on the details of these investments, and thus it is currently undecided on the amount it plans to spend.
Upstream (producer) initiatives
There is a limit to the number of households that can afford to eat premium-priced food on a daily basis, but the price points at which the company sells its meal kits make it hard for it to make inroads into the mass market. Because domestic production of organic agricultural products is constrained by soil and climate conditions, and thus tends to be very labor-intensive, there is a limit to how much the company can bring down its own purchasing prices even when buying in greater volume. For these reasons, in order for Oisix ra daichi to achieve substantial growth, it will need innovations to bring down costs on the production side. Since the company has no expertise on the production side, it is instead hosting gatherings to give its contract farmers a forum to share their own expertise with other farmers, investing in agriculture technology ventures, and establishing business alliances with other companies that do have expertise in this area. The acquisition of Toyoichi Co., Ltd. is another one of the company’s upstream initiatives. The company aims to secure fresh marine product purchasing channels free from intermediaries, thereby increasing the value of the marine products category in each brand while also reducing costs.
Sustainable retail initiatives
The company states that it will continually evolve the way it connects consumers with producers to create a sustainable society, and that it will employ business methods that address social issues related to food. The company is actively working on sustainable retail in the sense of harnessing its business model and technology to provide quality food that is good for people and the planet. Its belief is that taking the initiative to address heightened social awareness of food loss reduction and carbon neutrality will help its business grow.
In its 1H FY03/21 results announcement, Oisix ra daichi announced new initiatives to protect the environment. It plans to adopt its own “green standards” (aiming to halve greenhouse gas emissions from its production processes within five years) and conduct trials of delivery vehicles powered by green energy, work to make its packaging more environmentally friendly (changing at least half of its packaging to eco-friendly alternatives within five years), enhance efforts to prevent food loss throughout its supply chain centered on its Kit Oisix meal kits, and promote sales of upcycled foods (made by converting foodstuffs that would otherwise be discarded into new foods).
The company reduces food loss upstream by using surplus and irregularly shaped vegetables at Kit Oisix. It also reduces food loss midstream by achieving a low disposal rate of 0.2% (versus the retail average of 5–10%) by matching harvesting with demand. Downstream, the company reduces household food loss by roughly one-third by using no more than the necessary ingredients in the necessary quantities at Kit Oisix. The company aims to achieve carbon neutrality in the entire supply chain, from production to delivery, by end-FY03/26.
Business
Business model
Overview
Oisix ra daichi is an online and catalog retailer specializing in the sale and delivery of fresh food products and ingredients. The company takes pride in offering products that are safe, delicious, and of high added value, including organic vegetables, specially cultivated agricultural products, and additive-free processed foods. It says its business concept goes beyond a simple food delivery service as it aims to provide solutions to bring more value to customers’ dining tables once the products are delivered to their homes.
The company has three domestic brands–Oisix, Daichi wo Mamoru Kai (Daichi), and Radish Boya. They all offer home delivery services for fresh produce, but do not share the same distribution system and operational flow due to differences in origins and history. The company plans to improve overall efficiency by consolidating their common functions. However, because the brands’ business focus and the value they offer to customers are different, the company assigns a manager for each brand who spearheads brand-specific strategies for business operation and product development.
Unless otherwise indicated, the discussion below refers to the company’s three major domestic brands: Oisix, Daichi, and Radish Boya.
Approach to management accounting
Oisix ra daichi has established a subscription model that generates sustainable profit by rigorously recovering cost per acquisition (CPA)*1 and managing profit and loss per delivery.
Commitment to managing CPA and LTV
The company aims to recover cost at an early stage by managing cost per acquisition (CPA) against the lifetime value (LTV)*2 of a customer on a profit basis, calculated as “ARPU (average spend per order x average purchase frequency [per-customer order count over a given period]) multiplied by the segment profit to sales ratio*3 before advertising expenses.” The company assumes it generally takes six months to recover CPA for the average subscriber. It lumps subscribers acquired through online ads and TV commercials together when considering the recovery period of CPA.
ARPU per month is about JPY11,000 for Oisix, over JPY20,000 for Daichi, and slightly below JPY20,000 for Radish Boya. These values are before ARPU increased due to the impact of COVID-19. The segment profit to sales ratio before advertising expenses is about 20% for all brands.
Daichi and Radish Boya have a longer history than Oisix, and their growth was mainly driven by newspaper ads. Following the global financial crisis in 2008, subscription rates for paper media declined in tandem with changes in the economic situation of the company’s target customer base. This meant the same amount of money spent on advertising produced fewer new customers, and the CPA went up even as the LTV per customer went down. Oisix was able to adapt to this change because it mainly uses online advertising. Daichi and Radish Boya were slow to adapt, but since the merger they have adopted the management methods used by Oisix to address the issue. In FY03/19, the Radish Boya business moved into the black on a segment profit-basis.
Commitment to profit/loss management by delivery unit
The company quantifies loss-making deliveries as a percentage of all deliveries, and applies this data to structurally reduce such loss. According to the company, a delivery unit will be profitable at the segment profit level before advertising expenses if the spend per order exceeds a certain level.
Key performance indicators
The lifetime value (LTV) of a customer measured on a profit basis is an important metric in analyzing the profitability of a subscription business model. The company positions components of profit-based LTV as its core KPIs, which it further breaks down into sub-KPIs it has established, and sets targets for individual indicators.
Segment profit
We note that the company’s definition of segment profit is “sales minus expenses that can be linked to business segments;” not “sales minus variable expenses,” which is its common definition in Japanese management accounting.
The company deducts cost of logistics centers and advertising from sales when calculating segment profit, because they can be linked to business segments.
Core KPIs
Core KPIs include the number of subscribers, spend per order, and purchase frequency (per-customer order count over a given period), with the number of subscribers having the greatest effect on sales growth. Spend per order remains relatively stable due to the presence of a minimum order amount for free delivery and purchase frequency is generally determined by the lifestyles of the target customer base. Growth in subscriber count is affected by the amount the company spends in advertising.
Number of subscribers
Until end-FY03/19, the definitions of “number of subscribers” differed by brand, but following the company’s push toward more stringent subscription management, definitions at Daichi and Radish Boya were revised to exclude non-active users.
Cancelation rate
Companies adopting a subscription model usually focus on lowering the cancelation rate to ensure a steady increase in subscribers (regular customers) who are the source of future profit.
According to the company, subscriptions are canceled because of a mismatch between the sales price and the price range the customer can tolerate. Some customers also realize after becoming subscribers that regular home deliveries do not suit their lifestyles. The company is working on lowering the cancelation rate by introducing a dedicated committee responsible for improving customer satisfaction.
The number of subscribers to Oisix is rising because new subscriptions are increasing faster than cancelations. Assuming the cancelation rate does not change, in order to sustain growth the company must continue spending on advertising to win new subscribers. Most new Oisix customers are women who adjusted their thinking about the importance of food as a result of pregnancy, childbirth, and child-rearing, and now want to serve safe and reliable food to their children.
It is relatively easy to cancel the company’s services after the end of the initial free delivery period (in the first three months), which usually produces a pattern of a sharp increase in subscribers in one quarter followed by a slowdown in the net increase in the following quarter. According to the company, cancelation rates drop six months into a subscription as customers become accustomed to regular home deliveries and adjust their lifestyles accordingly.
ARPU
Buying habits of new subscribers are developed soon after joining so it is crucial to lift ARPU at an early stage through measures to promote the purchase of products across various categories. Spend per order does not differ significantly between new and existing subscribers due to the existence of a line where free shipping kicks in. However, purchase frequency is lower for new subscribers until they become established.
Business processes
Product planning and development
The process of commercialization takes one to three months. The company identifies vegetables whose tastiness growers/sellers have difficulty conveying to consumers, and sells them under a new, appealing name. For example, it sells juicy turnips with a peach-like sweetness when eaten raw under the name “Peach Turnip.” Various improvements are made to packaging and other peripheral items. Assuming produce is used for home cooking, it is packaged in a way that they can be preserved better in refrigerators or in quantities that can be finished by small families. Oisix interviews subscribers to identify latent customer needs. For the Kit Oisix service, the company develops menus so that a minimum of 20 different meal options are available at all times to prevent boredom. The company plans and develops processed food products other than Kit Oisix, mainly those processed to the point that they only require the final cooking stage such as grilling. In product planning, the company first determines the product design and estimated selling price based on a price range at which the product is likely to sell. It sets a fair gross margin and then works out procurement.
Marketing
Promotions are mostly conducted online (listing ads and social media ads), primarily to attract new customers. The company also advertises its brand through TV commercials.
Procurement
The company procures directly from producers. It has contracts with about 1,200 producers for Oisix, 2,700 for Daichi, and 2,400 for Radish Boya. Excluding overlap, the total comes to about 4,000 as of May 2021. The company also procures from around 5,000 food processing companies. The company previously faced a shortage of producers, but the merger with Daichi and Radish Boya largely resolved the shortage, and the company noted that procurement is no longer a bottleneck to business expansion as of November 2020. According to the company, the scale of producers tends to expand as the company grows.
Safety and quality standards
- Each brand has its own standards and, generally speaking, compliance with these standards raises producers’ costs compared with traditional farming that uses agrochemicals and chemical fertilizers.
- Each brand buys from different suppliers because of differences in their safety and quality standards, although there is overlap of about 50% between Daichi and Radish Boya, which have similar standards.
- The company cultivates new suppliers mainly through referrals from existing suppliers, plant nurseries and seed suppliers, and fertilizer manufacturers.
Ordering
The company has a structure for supplying fresh produce for as long a period as possible by working with producers all over Japan, because harvest locations change with the seasons. Weather conditions can make the difference between large and small harvests. If a harvest is poor, the company buys from suppliers in other regions. If a harvest is larger than expected, the company is not obliged to buy more than the contracted volume.
When it comes to forecasting demand, the company reaches a general agreement with producers on approximate order quantities and prices some 3–6 months prior to actual orders being placed. Buying prices are fixed when these preliminary agreements are put in place. This arrangement works to the benefit of producers by providing clarity with regard to their expected future income, while offering the company the benefit of being able to buy at lower prices when market prices rise above the agreed price. (Put another way, the company has assumed the price risk.) From the consumer’s standpoint, the company’s prices are stable regardless of market prices, so few customers switch to other companies because of short-term price fluctuations. Since doing business with the company allows producers to forecast their revenue, the company says they are more likely to agree to increase the order volume when needed. Thus, the company does not expect supply-side constraints based on usual rates of business growth.
The company places individual orders with suppliers after receiving orders from customers and does not hold inventory at distribution centers with the exception of items that are easy to handle and have long shelf life.
Distribution and processing
The majority of the company’s purchases are made directly from producers. Processed foods are planned by the company, but manufactured by contract suppliers.
Distribution Centers
Roles and functions of distribution centers
As of February 2022, each brand had its own distribution center and the facilities have not been integrated. The roles and functions of distribution centers vary from brand to brand.
All of the company’s distribution centers are leased. Oisix operates its own distribution centers; Daichi and Radish Boya outsource distribution with the exception of frozen foods. Oisix initially used third-party distribution centers but subsequently switched to running most of its own distribution centers after the company it had outsourced to suddenly went out of business. For order picking, the company has created efficient distribution center operations through the use of a specialized digital picking system dedicated to handling food delivery.
Distribution costs break down into variable expenses (personnel expenses, which have a large weighting), and fixed expenses such as rent, which have a relatively small weighting.
Capital expenditure in distribution centers
In Q1 FY03/21, the company established a satellite center devoted to the small SKU service Sakutto! Oisix in Fujisawa (in Kanagawa Prefecture, like Ebina) in response to the sharp increase in demand for Oisix amid the COVID-19 spread. It also uses part of Radish Boya’s Zama Station for trial kits.
As an interim solution before the new Ebina distribution center opens (see below), the company built a new satellite center in Sayama (Saitama Prefecture) in October 2020. It is expected to cover capacity from Q4 FY03/21 onward until the new Ebina distribution center starts operation in October 2021, with an up to 50% increase in capacity (including increased shipping capacity of existing distribution centers due to the start of operation of Sayama Station). The company plans to use the Sayama satellite center only temporarily, which will increase logistics costs by about JPY15mn per month while in operation as it will conduct interfacility product transfers with Ebina distribution center.
The new Ebina distribution center for the Oisix brand opened in September 2021, with a planned tripling of capacity versus FY03/20. This will consolidate all distribution for the Oisix brand. The Ebina center began full-scale operation in January 2022. The Fujisawa/Sayama satellite center is to close on a phased schedule and the Zama Station returned to exclusive use by Radish Boya when the new Ebina Center opens. After the new Ebina Center is up and running, the current Ebina Center will be repurposed as the Oisix Food Rescue Center, which will specialize in reducing food loss, such as processing imperfect fruit and vegetables. This will not require large capital investment, because the company only needs to invest in machinery and equipment to repurpose an existing facility.
In addition, when it released its Q1 FY03/22 earnings results, the company announced that it would invest about JPY4.0bn to expand its freezer facilities. It plans to triple its frozen shipment capacity versus FY03/21, with the new facility starting operation in fall 2023.
Capacity utilization rates
Capacity utilization rates of distribution centers vary between brands and locations. Due to the increase in demand associated with the spread of COVID-19, logistics capacity of the Oisix brand temporarily tightened in 1H FY03/21, but this was resolved in 2H.
Inventory
As a rule, the company does not hold inventory of fresh produce at distribution centers, because orders are placed with suppliers after the company receives orders from customers. For products such as milk and eggs for which there is a risk of damage, the company orders in volumes that reflect the risk. As an exception, the company holds inventory for products that can be stored at room temperature, such as bottled water.
Lead times
Deliveries from producers to distribution centers take about a day, dispatching orders from distribution centers takes another day, and last mile delivery to customers takes another day, so the total lead time is generally about three days. Daichi and Radish Boya have shorter lead times for last mile delivery, because they charter delivery trucks rather than using regular delivery services and thus orders delivered to the distribution center in the morning can be delivered to customers the same day. Because this is generally less time than it takes for fresh food to get to the consumer via traditional channels (going from the market, to the wholesaler, to the retail outlet, and then to the consumer), the company is able to deliver products that are fresher than those that can be found in the average grocery store.
Last mile delivery
For Oisix, last mile delivery is provided by Yamato Transport (Yamato Holdings’ home delivery service; see reference below on Japan’s home delivery business). The company uses chartered delivery trucks for Daichi and Radish Boya.
Differences in distribution centers and last mile delivery between brands are mainly attributable to the difference in when the brands were founded. Daichi (founded in 1975) and Radish Boya (1988) have a longer history than Oisix, and considering the limited network of refrigerated home delivery services and the associated costs back then, the two brands had no option but to work with local delivery companies to build their own networks and gradually extend them. In contrast, Oisix was founded in 2000, when major home delivery companies already had their own refrigerated delivery networks. Thus, the brand was able to utilize these networks and quickly expand into a nationwide service.
The company commented that it uses Yamato Transport in addition to its chartered trucks, because Yamato offers the best quality of service. For chartered delivery, the company works with transport companies in each region to set up regular delivery routes, which are covered by dedicated delivery trucks. These trucks are marked with the name of the brand, helping to raise its profile in the community.
Business description by segment
Brand concepts
Similarities
The company sources food products and ingredients focused on food safety (such as organic vegetables, specially cultivated agricultural products, and additive-free processed foods), and sells them to consumers online or via mail-order catalogs. The basic model is the same for Oisix, Daichi, and Radish Boya. The company’s products are high value-added and suppliers are limited to producers (farms, etc.) and food processing companies that can satisfy the safety and quality standards established by Oisix ra daichi. This high bar pushes both purchase and sales prices into the premium range. Although the company does not particularly target certain geographical areas in its marketing strategy, most of its customers reside in major cities. We understand this is because major cities have a larger percentage of high-income households and a greater need for buying food online.
Differences
Oisix is a service that was created from the user’s perspective, Daichi from the producer’s perspective, and Radish Boya from an environmental perspective (see History section of each brand below). This accounts for the differences in the features and positioning of each brand. The company plans to maintain all three brands and pursue synergies in indirect functions such as marketing and fulfillment. According to the company, there is little migration of customers between brands.
Oisix home delivery business
History
Dedicated to the user’s perspective from the start, the company chose the name Oisix for the service based on the results of a survey of potential customers.
At the time of its inception, the company formed an alliance with the trading house Nissho Iwai Corporation (now Sojitz; TSE1: 2768), gaining personnel support and referrals of supplier farms from the Nissho Iwai organic products team. In the early days of the company, most members of the management team and most employees had little knowledge of agriculture. However, this inspired them to help consumers learn more about food production and bring them closer to producers by selling nonstandard/imperfect vegetables that were typically discarded rather than sold and types of vegetables that farming families produced for their own consumption only, due to the difficulty of maintaining freshness in conventional retail channels.
Oisix has a policy of identifying products consumers want to buy instead of selling what producers want to sell. Based on this policy, the company will not choose produce because it had a good harvest, but rather, estimates orders based on customer demand, and coordinates the timing and volume of harvest with producers.
Safety and quality standards
Oisix sells products that enable busy families juggling work, housekeeping, and parenting to enjoy delicious and varied meals that are easy to make. The brand’s safety and quality standards can be summed up as “ingredients that producers feel comfortable giving to their own children.” It handles vegetables that are at least certified as “specially cultivated agricultural products” or meet an even more stringent standard. All processed food must be free of artificial colorings and preservatives, and the main ingredient must be GMO-free. All fruits and vegetables, dairy products, eggs, fresh fish, and meat are tested for radioactivity before shipment.
Main services
Oisix (Oisix main store)
Every Thursday at 19:00, Oisix places a recommended list of items for the weekly subscription boxes in the customers shopping carts, to which they can add or remove products as necessary before the deadline.
The company generally has more than 1,000 products available. Fresh produce accounts for just over 20%, Kit Oisix about 20%, and other perishables (such as dairy and eggs) 15–20% of sales.
Products are delivered on a day of the customer’s choice by third-party delivery service Yamato Transport. Delivery is free on orders over JPY6,000 (excluding tax), lowered from JPY8,000 in February 2019 to encourage light users to buy more frequently.
The deadline for orders is generally 10am two days before the delivery date (except for deliveries on Sundays, Mondays, and Tuesdays and those to remote locations for which the deadline can be as early as 10am five days before the delivery date). Customers can cancel the week’s delivery if they wish, provided it is before the deadline. This ordering method allows customers to plan their orders around recommended products, reducing the time it takes to plan menus and helping them make new discoveries in each order. Orders can be customized, which minimizes the stress of customers ending up with products they do not need or not receiving items they do need. Meanwhile, the method helps the company because it provides a guaranteed sales channel provided customers do not cancel. As the supply of agricultural products is not always stable, the system also allows the company to make adjustments by including or excluding an item from the subscription box depending on availability.
The company refers to removing an item from the subscription box as abandonment. Abandonment refers to items that subscribers have decided not to buy. Each customer makes a maximum of 52 selections per year, which enable the company to make recommendations that suit each customer’s food preferences.
Customers can choose from four subscription box plans and switch between them at any time. The default option at registration is the Kit Oisix menu plan for two people.
Kit Oisix menu plan: Main contents are the Kit Oisix meal kit consisting of prepared ingredients and seasonings, and food items that help save time, such as pre-sliced vegetables. The plan caters to customers with busy lifestyles who wish to make tasty meals. In addition to the previous options of two or three servings per meal, a new four-serving option has been added (doubling the two servings option) to accommodate the recent trend of sheltering in place due to COVID-19.
“Delicious selection” plan: This plan provides an all-around combination of seasonal fresh produce, unusual vegetables, and easy-to-use daily goods. Kit Oisix is not part of this plan. This plan is for customers who like to enjoy tasty vegetables.
Chanto Oisix plan: This plan provides an evening meal recipe and ingredients set combining vegetable-based ingredients for three or five days (Chanto Oisix) as well as time-saving ingredients. This plan is for busy customers who like to enjoy tasty vegetables while saving time. Customers can choose between three-day and five-day plans.
“Mothers and expectant mothers” plan: This plan is centered on products that have undergone radioactivity testing, offering organic vegetables and other ingredients that can be used for baby food, with monthly advice from a nutritionist for specific cases such as pregnancy and children. This plan is for expectant mothers and those with young children.