Buying American in Japan

Cheerios and Dr. Pepper, not to mention other U.S. packaged goods, have enabled Chuck and Kelly Grafft to create a $7 million business in Japan. Their secret: They’ve found transplanted Americans like themselves who miss such products, and Japanese consumers who crave them.

The Graffts had no catalog experience when they established the Kobe-based Foreign Buyers’ Club (FBC) in 1987. They hand-addressed copies of their first catalog to a list of 500 missionaries in Japan, 100 of whom ordered products such as Kraft macaroni-and-cheese and Bisquick Pancake Mix. These items, when available in Japan, cost far more than in the U.S. (A 40-ounce box of Bisquick sells for about $6.75 in Japan, says Chuck Grafft, who sells it for $4.80. It retails for around $2.75 in the U.S.)

The Graffts are able to undersell Japanese merchants by ordering from California-based distributors and sending the goods to Japan by container ship. By buying at lower U.S. wholesale prices, FBC pays far less than it would in Japan, even after customs duties and import taxes. But there is a slight catch for FBC customers: Orders take amonth to reach them.

That doesn’t keep FBC’s more than 15,000 customers from averaging approximately $300 an order. And Grafft reports that FBC receives 500 requests for catalogs a month – particularly significant given that FBC does no prospecting, relying solely on word of mouth to build circulation. Available mailing lists in Japan are rare and expensive (Lincoln, NE-based Acton Direct, for instance, offers a compiled list of Japanese consumers starting at $175/M), and Grafft says that print adertisements in English-language publications have been ineffective.

For their part, the Graffts refuse to rent out the FBC list. “But we started accepting space ads because lots of people want to reach our buyers,” Grafft says. “The first ads fell into our lap seven years ago, when three companies approached us and asked to `be introduced’ to our customers.” In addition to selling ads, FBC accepts 12 ride-along pieces a year.

The Graffts expect FBC to expand despite the sluggish Japanese economy. The catalog has already increased its offerings to include books, toiletries, and baby products. The company opened one store in Kobe in 1998 and plans to open others, including one in Tokyo, this year. FBC also hopes to set up operations in China next year, but “that may be a bit overambitious,” Grafft says.

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