Company Expects Japan Market to Exceed Germany

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TOKYO - Viking Office Supplies plans to drop "several million" catalogs when it launches in Japan later this year and expects that market to be larger than Germany despite the severe Japanese recession.


Germany was Viking's most successful foreign launch to date with first year sales close to $100 million. Isamu Odajima, president of Viking Japan, noted that Japan's potential market size was 1.5 times larger than Germany.


"We think that Japan will be a larger market for us than Germany was," he said, but warned that he could not make concrete predictions before the first results from the catalog drop are in.


Viking has 18 different catalogs in the US with high-end customers receiving 2-3 catalogs a week, a pattern Viking may follow in Japan. "We're thinking seriously about personalizing catalogs for the first drop but haven't made a final decision."


The company's Japanese infrastructure is taking shape rapidly. Headquartered in the Gotanda, Sinagawa-ku section of Tokyo, Viking will have two floors for a call center facility.


It is building a warehouse with 10,000 square meters in Fuji city that should be able to handle 6-7 thousand orders every day "in the earlier stages," Odajima said. He expects to employ 200 people in full and part-time jobs.


Initially Viking will sell only Japanese-sourced merchandise "that Japanese customers are accustomed to and we're talking with major Japanese vendors right now." Eventually, however, it plans to sell imported items too.


The range of products will be built up slowly, and it will take one or two years for the Japanese company to match the 12,000 different items Viking sells in the US.


As it has done in other foreign markets, Viking does not plan to make its mark on price, but on service, quality and wide assortment of merchandise.


"I think we will not say 'every day, low price,' as some of our competitors do in their catalogs. We don't plan to engage in any cut-throat price competition," Odajima said.


Viking does not plan to advertise in local media, but to rent outside lists of small Japanese companies and mail directly to them, either catalogs or flyers.


The new firm's capital investment is 50 million yen (less than $500,000) so an infusion of parent company funds to pay for all the infrastructure investment will be needed. The money will come in the form of an inter-company loan.


Japan's BTB market is still relatively modest. The trade paper Tsuhan Sinbun estimated market size last year at 100 billion yen ($TK).


Odajima thinks that will change rapidly as the market expands exponentially. He is also encouraged by the lack of serious competition for mail order office products.


Viking's merger with Office Depot is not expected to affect the launch, even though Office Depot opened in Japan last year. But before shareholder approval of the merger "we cannot even talk with Office Depot's staff," Odajima said.


"In general, I think we will be able to help each other but I can state clearly that we will run two brands - I mean 'Viking' and 'Office Depot' - here in Japan."


Masahiro Nawata is managing editor of the Toky-based DM trade newspaper Tsuhan Sinbun and a regular contributor to DM News International

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