PIE VAT: U.S.-originated startup carves out niche in tourism industry

When Pie Systems was launched in 2018, international tourist arrivals had grown by 5% to reach 1.4 billion and export earnings in the industry had reached $1.7 trillion. But by 2020, with the COVID-19 pandemic raging and borders closing, that changed.

For Pie Systems, a startup with a mobile app that facilitates tax free transactions for tourists, these have been challenging times. However, cofounder and CEO Sunny Long says the company continues to grow its markets and services, including entering Japan in 2021.

Why did you start Pie Systems?

My cofounder Dominic Sheehy and I were thinking about the numerous challenges that tourists face when traveling abroad, including payments and shopping.

In that vein, one particular memory surfaced. I was lucky enough to have traveled a bit around Europe and, as a tourist, had gone through a VAT (value-added tax) refund process. It was horrendous. And that got Dom and me thinking.

In the travel industry, where we have hundreds of millions of people traveling every year, this is something that we wanted to help with: saving money, saving time, and providing an all around better tourism experience.

What can you tell us about the solution you came up with?

The mobile app is called PIE VAT. You can find it on the App Store for iOS and Play Store for Android. That is the consumer-facing app. If you download it, you can see which stores work with us, and you can shop at those stores. Everything is digitized. That means, after making a purchase, you can upload your receipt, scan your passport, and receive your VAT. Everything is done through the app.

What was life like for tourists before the PIE VAT app?

Traditionally, the tax refund comes to you anywhere from a week to three months after you’ve left the country, if at all—reviews online show copious amounts of frustration and complaints on refunds never arriving—and having waited in lines to fill out paper forms. If the refund arrives, there is a 30-40% fee charged on your refund amount, which is outrageously high!

We’re turning that upside down by building features that allow you to get it done much sooner and much smoother. Our goal is to ensure tourists get the most out of their travel experiences, and not short change them.

Sunny Long, right, and country manager Hiroaki Mizuno Image: Pie Systems/Michael Holmes

When and why did you enter the Japan market?

We entered Japan almost a year and a half ago. When we look at market opportunities, there are a couple of things that come to mind: market size, the defensibility of the market, and competition.

When looking at markets where there are many tourists—and where there is a lot of tax free spending—you think of Spain, France and Italy. However, Japan is 6th or 7th globally, making it a very large market.

Second, and arguably more importantly, Japan is a growing market—with more tourists arriving every year. There is also an underlying theme from the government regarding the promotion of tourism to grow GDP, and also to promote digital transformation or DX. Finally, tax free penetration in Japan (the number of stores offering tax free shopping) has room to grow more than 10x!

Finally, in terms of competition, the concept of tax free started in Europe in the 1980s. In Japan, tax free only started in 2013, less than 10 years ago. We saw this as an interesting opportunity because (the tax free vertical in Japan) hasn’t been as commoditized as in some European markets—and has a lot of room to expand.

You launched in Japan amid COVID-19. What’s been the traction here?

Of course, COVID-19 was (and still is) a huge challenge for our business. However, we have accomplished a ton in that time that I’m super-excited about. First, we’ve built a world class team in Japan; we are now at six or seven folks, led by our amazing general manager, Hiroaki Mizuno.

In terms of store partnerships, despite the COVID-19-induced lack of enthusiasm, we’ve managed to engage and partner with some amazing stores in Japan—including Porter, a bag brand; C’bon, a cosmetics maker; and, Imayo Tsukasa, a maker of sake drinks. Our digital solution has gained traction across all the major tourist regions, from Tokyo to Osaka to Hokkaido.

Image: Pie Systems/Michael Holmes

Can you tell us about PIE VAT Station and your overall impression of this market?

One of the crowning achievements when entering Japan was launching PIE VAT Station, a (digital) counter solution for AQUA CiTY ODAIBA, a large mall in Odaiba, Tokyo. We launched that at the end of last year, and are working to simplify the refund solution for tourists to the mall. The PIE VAT Station itself is a beautiful space that shines minimalism and technological inspiration. Through PIE VAT Station, AQUA CiTY ODAIBA is the first mall in Japan to provide a digital and efficient tax free solution for tourist shoppers.

Combining the stores and partnerships we’ve forged, we have a really strong roadmap for this year for the partners that we want to go after—as we build up to when tourists come back. All things considered, we are off to a fantastic start in Japan and are excited at what the future brings.

• External Link
• https://pages.pievat.com/ja-jp/lp1