After the doom and gloom of late 2008, it is time to take a new look in 2009 at great market opportunities. A number of long-time mailers targeting the Japanese market are enjoying an up-tick in their Japan business, in spite of static sales—thanks to a favorable currency exchange rate.
Last year at this time, the Yen was trading at about 120 to the U.S. dollar. This year it is right around 90. This means something you sold for 10,000 yen last year would have yielded an $83.00 sale–the same 10,000 yen sale this year yields $111.00! Very few markets currently offer an opportunity for this much gain on the same sale.
Many mailers who have been living on house files or very reduced programs in Japan are suddenly cranking up their efforts to take advantage of the favorable currency exchange rate. It is difficult to predict how long the exchange rate will remain this favorable, but other fundamentals for Japan are still in place.
There are two very active direct marketing associations in Japan–both have the same initials. One is the Japan Direct Marketing Association, which is primarily made up of large catalog companies. Membership is strictly limited to catalogers and other merchandise sellers. The Japan Direct Mail Association is supported by the Japan postal service and is primarily made of up service companies supporting the direct marketing sector.
Japan has a very sophisticated population, accustomed to mail order and on-line transactions both domestically and internationally. Japan has one of the largest disposable incomes on the planet for any country. Regardless of population, Japanese consumers spend more on mail order than Chinese consumers even though there are ten times as many Chinese consumers!
A a wide variety of highly responsive and reliable lists are available. Japan is the second largest list market in the world after the U.S.
Several years ago, new privacy rules were initiated in Japan which cast a dark cloud over the Japanese list business. It was widely believed it would be impossible for a domestic Japanese company to rent their lists out. The intent of the law was certainly not this, and the execution has proved to be otherwise, but many Japanese consumers believed it was “illegal for a company to mail to them” and consequently they complained very vigorously any time they would receive a mailing.
Recently, a number of domestic Japanese companies have re-entered the list rental business, which has been very beneficial to large-scale marketers looking at entering the market.
In spite of this semi-relaxation in list availability, the Japanese market can still be daunting. There are many gray lists on the market–data protection in Japan is like most of Asia–not nearly as strong as in the U.S. Because it is possible for someone to steal data without the same criminal penalties, it unfortunately is a more regular occurrence. Legitimate marketers will avoid utilizing stolen data, but some questionable marketers will turn a blind eye. Because of this, and because of the difficulty in getting data, there has been, and probably will continue to be, a certain taint to many so-called offshore lists.
List performance in Japan is as variable as list performance in the U.S.–the old adage of testing certainly holds merit! On some lists some clients will report outstanding performance, while other clients will report the same list selections performed dismally–sounds like the rest of the world? Generally speaking, there are good, reliable list sources available from a number of organizations; and a sizeable, scalable, sustainable program can be developed.
Last but not least, Japanese customers are very loyal–most everyone with a mail order business in Japan reports their Japanese customers have nearly three times the lifetime value of their next best country.
If you are currently thinking about a new market, Japan should be included in your research. There are complications—the language and currency are different; however, this can be overcome with ease. There are a number of large- and small-scale call center organizations which handle banking and payment matters, and a wide variety of other providers to help you on your way. Hopefully you can discover the land of the rising sun to be the opportunity for rising fortunes in 2009!
Jonathan C. Lambert ([email protected]) is the founder and chairman of ACTON International.
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