Covid-19 turned many consumers into amateur bakers. A Japanese E-Commerce called Cotta has been garnering their attention: its website boasts 160,000 registered users and the company reached $81million in revenue as of September 2021, a 45% increase from 2019.
The key to Cotta’s success is its digital media strategy that targets consumers. The company has over a million followers on social media, including 540,000 on Instagram and 258,620 on Facebook.
But Cotta is not a young company created by a tech-savvy Gen Z. It was founded 23 years ago as a wholesale business in Tsukumi, a small town in Oita Prefecture in the southern part of Japan. The company has demonstrated its remarkable ability to adapt to changing environments since the outset. The founder Seiichi Sato was a desiccant manufacturer that was selling to 5,000 small confectioneries nationwide. He recognized that his clients were reluctant to buy his products because of the massive lot size. So in 1998, he started a new company Taisei, now called Cotta, to offer items in small, more affordable batches for his clients. The strategy proved to be a huge success.
Then in 2010, Japanese convenience stores started to sell quality-oriented, individual-sized sweets, which dramatically reduced consumers’ reason to go to sweet shops. (Note: Japanese convenience stores are not the same as in the U.S. It is literally a part of Japanese people’s lives.) As a result, many of Cotta’s clients lost their businesses. The company nimbly pivoted to expand its customer base to home bakers and baking instructors to fill the void. Its new consumer-oriented website was launched in 2006 and the swift moves eventually led the company to join Mothers (Tokyo Stock Exchange) in 2013.
Cuteness Attracts New Users
The massive followers of Cotta’s social media are looking for “kawaii” or cute images on the company’s social media. Cuteness is a powerful, universal tool to attract a broad audience and thus it can be instrumental to acquire new users. (Also, cuteness has a special place in Japanese society such as anime characters, personalities and bento boxes.)
The company fully understands the importance of a constant inflow of new consumers for growth. Cotta was trapped by the advantage of E-commerce in the past – the solid data analyses on the existing clients led the company to lose its attention to the needs of potential new users. The solution was to shift its focus to new customer acquisition through social media.
Another clever digital strategy of the company is its effective use of bloggers. To keep supplying attractive, delicious recipes to its audience on its website, the company maintains a roster of over 100 influential bloggers as well as 30 notable pastry chefs who have offered over 17,000 recipes. Also, the website functions as a bakers’ community to share their own recipes and Q&A.
Cotta’s over 30,000 offerings range from baking ingredients, equipment and serving vessels for consumers to wholesale items like packaging materials and desiccants. Its consumer-oriented services such as free/paid recipes and online classes are highly popular too. Currently, 61% of the company’s revenue comes from consumers versus 39% from their wholesale accounts, according to its 2021 business plan.
Cotta is ambitious to become the go-to platform of baking for consumers and businesses alike. The company has competitors like major online retailers including Amazon and Rakuten. The prices at these sites may be cheaper but they do not have the depth and width in their offerings to satisfy serious home bakers like Cotta fans. Tomizawa Shoten, which was founded in 1919 and has over 50 brick and mortar shops nationwide, has been trying to catch up with Cotta through its website. Its potential is yet to be seen as the company’s emphasis seems more on products right now and it does not have as much digital content as Cotta to attract users.
Cotta’s position seems steady in the market right now, but the consumer demand may largely fluctuate in the foreseeable future. It is not clear how much the home-baking fever is going to last as Covid-19 becomes more in control globally. We will see how Cotta will navigate through upcoming challenges with its unique ability to turn crises into opportunities.