Surviving and thriving in Japan today

Mar 01, 1999 10:30 PM  By

By several accounts, it appears that the glory days of cataloging in Japan have all but disappeared. Many of the U.S. catalogers that raked in the yen in the mid-1990s are now pulling the plug on their Japanese ventures. After a few tests in Japan starting in ’96, general merchant J.C. Penney has stopped publishing Japanese catalogs, with none planned for the next few seasons. Saks Fifth Avenue Folio, which a few years ago was one of the first U.S. catalogers to establish a call center in Japan, closed the facility last year. The upscale apparel marketer now mails catalogs only to existing Japanese customers, having halted prospecting because of reduced response rates.

But despite the recent challenges of mailing catalogs in Japan, from financial woes to the waning novelty of the “personal importing” fad, the Japanese market is still a viable destination. If you abandon the get-rich-quick mentality that prevailed a few years ago and are prepared to work hard and create a long-term presence in Japan, you can still do well there.

For certain, the Japanese market has changed from when the overseas catalog boom started in ’94, when the yen was about 98 Yen to $1. (At press time, 112 Yen = $1.) Unsolicited catalog requests started trickling into mailers around the world from curious Japanese consumers. Requests turned into orders-many at least twice the average size of domestic orders.

The Japanese government helped promote this wave of personal importing. Manufactured Imports Promotion Organization (MIPRO), part of the Ministry of International Trade and Industry, sponsored a trade show in March ’96, at which 100 foreign catalogs displayed their wares for two weeks in Tokyo. Some 60,000 enthusiastic Japanese bought catalogs, signed up to receive more, and placed orders. By 1996, foreign catalogs accounted for $2 billion, or about 10%, of Japan’s mail order industry.

But U.S. catalogers found sales from Japan beginning to slip in 1996. Certainly the fad factor had faded by then; also, the economy was slowing, and the yen was falling. What’s more, catalogs had already picked the low-hanging fruit of the Japanese market: risk-taking consumers willing to order from English-language catalogs priced in dollars.

Adapt and conquer Although Japan’s economic downturn prompted some foreign catalogers, such as U.K.-based gifts cataloger Past Times, to pull out of the market altogether, many that have altered their strategies continue to thrive. For instance, automotive products catalog Griot’s Garage saw sales in Japan decrease in ’97. But instead of deserting Japan, the Tacoma, WA-based consumer mailer established a partnership with Japanese automotive firm Axis, which is owned by tire manufacturer Bridgestone. Axis now sells Griot’s Garage products and accepts catalog orders in its stores; the mailer also piggybacks on its partner’s magazine ad campaign. And Griot’s Garage still mails its English-language catalog-with a Japanese-language, yen-priced supplement-to Japanese prospects, says Kenji Yoshino, its director of the Japan market.

And the economy hasn’t deterred newcomers from entering Japan. David Rio, a San Francisco-based food gifts mailer, launched a Japanese-language catalog in October 1997 and mailed a second edition in June 1998. Despite the yen hitting a historical low, cofounder Scott Lowe says response was good, with orders for items such as peach ginger tea, olive oil, and biscotti averaging $175.

Ironically, Japan’s deepening recession may actually help some catalogers. Los Angeles-based Viking Office Products plans to launch in Japan this spring, says director of direct response Amit Mitra. The Japanese typically buy from companies based on cultivated relationships, Mitra says. “But in a recession, people look for alternatives to reduce their expenses, so it’s easier to break into existing relationships.” And the lower yen should reduce the traditionally high cost of setting up an operation and doing business in Japan for U.S. mailers.

Even with a weaker yen and lower consumer confidence, the Japanese market is too lucrative for U.S. catalogers to ignore. Compared to the domestic mail order and retail offerings in Japan, U.S. catalogers can typically provide Japanese customers with unique products at reasonable prices with exceptional service. And that never goes out of fashion.