Case Analysis: Seikatsu Club Consumers’ Cooperative

by Liudi Wang

Founded in 1965 as a “collective purchasing” club by a group of housewives in Tokyo, Seikatsu Club created a unique model, combining business and a vision of a community- and people-centered economy. The purpose of the club is to serve its members rather than generating profits. The emerging of this cooperative is a personal response to food safety issue and the awareness of environmental problems.

Strategies

The central strategy of Seikatsu Club is to use “cost-effective collective purchases” to make sure consumers are supplied with quality products at a fair price, and keep a commitment to the environment and improved life level at the same time. The Seikatsu Club’s unique buying system relies these strategies, which are:

1. The “Sanchoku” System

By delivering food and household items directly to its members (this process is also known as “sanchoku system”), Seikatsu Club brings producers and consumers into direct contact with each other. This strategy eliminates the need for a middleman, which not only reduces the cost that produced by the middle processing, but also makes the whole system run more effectively.

2. Advanced Order

Advanced order of “Sanchoku” Systemreversed the traditional “producers to consumers” flow, and let consumers tell producers what exactly they want ahead. By this way, the club formed alliances with workers, farmers and small businessmen, and creates trust and interdependence between producers and consumers. This relationship allows them to communicate directly with each other so that assures benefit for both sides: consumers get safe food at reasonable prices, while producers are assured of a secure livelihood and a reasonable income. Advanced order also benefits the environment from maintaining sustainability. It encourages consumers to reserve products according to their needs rather than allowing product to stimulate desire.

3. Investment strategy

As the purpose of investment is not profit, the club does not offer dividends to its members. When facing at rising competitions, unlike other co-ops to cope by decreasing investment and increasing dividends, the Seikatsu Club has stable investment from members monthly. As the business of the club runs by their inside cooperative investment, it also allows independent control of the producers and members. This inside group investment is also part of its vision to reduce the division between producer, consumer and investor. The close number of investment makes their positions tend to be equal, which gives members more power in the decision-making process. Within cooperatives, obtaining individual benefits must rely on seeking the mutual benefits of the whole cooperative. Therefore, giving more power to members could promote the development of the cooperative.

4. Low stocking of basic goods

With the concept of “one product/ one variety”, the Seikatsu Club offers variety brands for different types of product it sells, but each type of product only has one brand option. The selected brands are usually better than other brands, and provide a wide range of purpose as well. By reducing the categories and the options of each product, the club believes that it is able to ensure the quality as well as lower the cost of stocking.

Structure and Management

If classify the Seikatsu Club by structure according to the USDA report, it may be included in the category of national, member structure purchasing supplies. However, the Seikatsu Club has unique structural characteristics. Within the Seikatsu Club, individual members have no real buying power; rather 6-13 families form a group to purchase in bulk. These groups are the basic units of the Seikatsu Club called“Han”, which is also the base distribution and payment. Autonomous local groups act as the managerial part of the club. To work with each other, the manage group is responsible for purchasing making and broader policy decisions, while the execution process is handled by member-on-duty, such as receipt and dispersal of merchandise and collection of orders.

This structure proved to be successful in this model. First, volunteered members take responsibilities of organizing and operating orders, which reduces the cost of labor, and increases production and distribution efficiency as well. Second, participating freely and actively promote the communication between members. During this process, members “train and educate” each other so that nurture skills of self-management.

Compared to conventional vertical organizational structure, the Seikatsu Club decentralized the power of decision-making and execution on specific affairs, making the structure horizontal. When unexpected events happened, this structure is more flexible and efficient to solve the problem. In addition, considering the relationships with their neighborhoods, this family- or community-based group is trustworthy. Based on mutual life experience, they are more willing to join the force and achieve a common goal.

Social Mission

When the Seikatsu Club made their first purchase in 1965, collective purchasing is just a strategy to save money. However, over the next 40 years, the club has been developed into a social cooperative with concept “encompassing the whole of life”. They not only try to solve the food safety issue, but also care about the environment sustainability, and the political rights and social status of women. These social missions enhanced the opportunity to accomplish their goal.

First, the club’s attention to food safety issue and green production process expanded their business. When no local producer is qualified to cooperate with the club, they began to start their own enterprise. Two organic milk production facilities they run currently could be an example. They not only expand their business, but also their influence in the local area, since they became the source of green products.

Second, the unique model influenced the consumption habits of its members, leading them to consume in a healthy and environmentally-friendly way. Rather than being a passive consumer, the club encourages its member to think and select independently. Advanced order and regular delivery schedule, for instance, make members plan ahead so that reduces the extravagance and the wasteful use of resources. By training its members consider several issues when purchasing, they may also influence their member’s decision on purchasing products other than food and household items, such as clothes and cars. It enhances its members’ cooperation and awareness by keeping them close to the production and decision-making process.

Last but not least, their social mission of seeking equity for women, along with several successful movements arose the attention of governance. Then its members began to have chances to actually participate in the policy making process. Political participation provides the Seikatsu Club a powerful opportunity to change the whole society. Policy could supervise food manufacturers, control the waste released to the environment, and promote a green and healthy lifestyle to the whole society.

Challenges

As the Seikatsu Club provides a limited range of products and few options to choose, only purchasing through the club may not be enough to satisfy all members’ needs. Although the training may influence its member’s decision to some extent, the club could not guarantee green consumption outside the club. Sometimes prices, promotions, availabilities and other factors may also influence the consumer’s final choice. Compared to conventional cooperatives, it requires the club not only to focus on the quality of the product, but also the training of its members as well as its influence both inside and outside the group.

Another challenge the Seikatsu Clubfacing is that its selling model is actually narrowing down the category and brand of product, which is unfavorable to the market overall. If this model applied nationwide, it may weaken the competitiveness in the global market. It protects people and the environment; however, it is far away from improving the national standard of living.

The Seikatsu Club is a successful case of its kind. However, its success is based on other aspects of political, ideological and cultural nature. To apply this model to other culture, the leader must be highly familiar with population structure, national characteristic, and political situation it owns.

 

References

Yvonne Poirier, “Linking the Global and the Local: Seikatsu’s Vision”, http://www.geo.coop/node/322

Steve Dubb , “C-W Interview: Seikatsu Club Consumers’ Co-operative Union Interview of Seikatsu Club co-op delegation from Japan”,

http://www.community-wealth.org/content/seikatsu-club-consumers-co-operative-union

Richard Evanoff, “A Look Inside Japan’s Seikatsu Club Consumers’ Cooperative”, http://library.nothingness.org/articles/all/en/display/247

“What is the Seikatsu Club movement?”

http://www.learningcentre.coop/resource/seikatsu-club-rises-challenge-creating-new-co-operatives-younger-generation-society-which-m

Jet Hermida, “The Seikatsu Club Consumers Cooperative: A Unique Producer-Consumer Relationship in Japan”,

http://asiadhrra.org/wordpress/2007/08/21/the-seikatsu-club-consumers-cooperative-a-unique-producer-consumer-relationship-in-japan/

Honorary Award, Seikatsu Club Consumers’ Cooperative (Japan),

http://www.rightlivelihood.org/seikatsu.html

 

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