Japanese DM Fears More Failures After Forbell Collapse,But Sees Bright LightsTOKYO -- Japanese direct marketers are waiting for the other shoe to drop
following the bankruptcy last month of Forbell, a $115 million catalog company.
The concern is justified, given the fact that a growing number of catalogers are
facing a debt crisis. "We have to be careful about making sure that we deal with
the right cataloger these days," one vendor said.
The rising dollar isn't helping importers. Several overseas catalogers stopped
mailing into Japan last year, especially after the US currency passed the 130 yen
Even Lands' End with its established infrastructure in Japan is having problems
matching high growth rates of recent years. The company had to redo its forecast
for 1998 and revise it downward.
"The problem," Lands' End Japan president Gary Steuck said, "is in the
consumer's mind. People don't want to buy anything. They don't want to lose
anything. They only want to save money, which makes banks happy but not us."
"Everybody was shocked when Yamaichi Securities collapsed in November,"
Paul Hochberg, president of the Hawaii Direct Trading Company (HDTC) said.
"I wouldn't be surprised if people got nervous about investing here."
HDTC is a veteran of the Japanese market, having long done business with
Fujisankei Living Services and other major Japanese trading houses.
"We're seeing a slowdown and reversal of the international mail order business,"
Marc Fuoti, senior VP of McCann Direct in Tokyo, said.
"A lot of companies who came in after the business peaked in 1995 are pulling
out and retrenching because they are unable to enjoy the really profitable business
people promised them when they set up in Japan."
As a sales channel direct marketing "is getting pounded just as much as the retail
business. Profits are down and we're seeing some consolidation in the domestic
mail order market," Fuoti said.
Acton's Jonathan Lambert expects 300 lettershops in Japan to go bust in 1998.
"They've been severely stressed for years. In yen averages lettershop prices are
50 percent lower than they were four years ago."
Catalogers, Lambert said "will have to be more aggressive on pricing and
merchandising and offset lower prices through greater response."
He does think, however, that one or more big Japanese domestic direct marketer
will be on the auction block this year. "If the dollar hits 150 yen some major US
or European company, Otto for one, may go in and buy Nissan," a big player on
the domestic market.
But not everything is gloom and doom on the Japanese DM scene. Deregulation
of Japanese financial services later this year should give DM a solid shot in the
Fidelity Investment will set up a direct marketing business here with a new call
center. Apple Japan is pondering use of the Internet as another direct sales
channel. Last fall Dell sold $400,000 worth of computers on the Japanese web in
CUC Japan, a joint venture between CUC International and Mitsubishi, will
launch a membership program this spring together with the Fuji Bank, one of
Japan's largest, and will use a direct mail campaign to do so.
Citibank has reported a growing inflow of funds, especially in the now legal
foreign currency accounts. The bank plans to expand its Japanese call center
facility to handle new business.
Some US catalogers have persuaded Japanese consumers that their services,
systems and product quality is higher than Japanese companies, thus building
"We're seeing a strong shift in marketing philosophy to loyalty programs and
relationship marketing," Fuoti said. Even as ad budgets are being capped he has
seen more money flow into DM."
AMA's Seminar Business Booming In Mexico
Return to profitability after recession
By Thomas Weyr
MEXICO CITY -- The American Management Association dropped 2.4 million
brochures to the top 20 cities in Mexico in 1997, a year marketing director
Martha Zazueta called "incredible for us."
The peso crisis and subsequent deep recession in 1994-95 hurt the company's
business, she acknowledged. "We really had to pull out our best -- cut budgets
and clean our database -- just to survive."
One method was to expand seminar coverage from Mexico's top ten cities that
include Mexico City, Monterrey and Guadalajara to the "second" ten featuring
such towns as Pueblo.
That meant sending trainers out to smaller localities but the move boosted
business because companies did not have to pay extra to send personnel to the
larger cities for training sessions.
"We've been profitable for 20 months in a row now with one exception --
January -- but that's always slow and the economy doesn't pick up until the
second half of the month."
AMA offers 600 seminars in Mexico and markets all of them with the same mail
piece although each brochure mailed out contains only a dozen or so different
The company has a house file of around 100,000 with two thirds companies, the
rest individuals who have taken seminars in the past and are now repeating on
Some b-t-b lists are rented from brokers but rental within Mexico is often difficult
because owners won't allow deduplication.
"One of our major economic magazines won't allows its list out of the house. You
have to send the material and the envelopes to their office and they drop the
mailing off at the post office."
Zazueta said the list business is "improving slowly" so that renters willing to sign a
contract can take lists with them. But she prefers to rent Mexican lists from US
list companies. "We have a special agreement with Direct Media," a Greenwich,
AMA does some off-the-page advertising in national newspapers like El Reforma
and used the English-language Mexico City News to promote special speakers
who come down from the US.
"We use telemarketing. We have a home page on the web. We are planning to
do something on radio next year and to e-mail our clients to keep them informed.
"E-mail makes up five percent of our total house file. It is still something brand
new in Mexico so most people don't have access to it."
In addition to public seminars the firm offers custom-made services to companies
who want individualized training sessions presented on site.
AMA has about 100 trainers on tap in Mexico. They are not on the payroll but
"work for us on a regular basis." The Mexico City office employs 30 full time to
manage marketing, programs, scheduling and registration.
Materials such as books, CD-Roms and videos come from AMA headquarters
in New York. Some are already in Spanish, others are translated locally. About
70 percent of the presentations are in Spanish, the rest in English.
Payment is by check, credit card, direct bank deposit (similar to the European
giro accounts) and cash. "People often decide to walk in the door and pay in
Cost depends on the seminar. One day seminars cost 1,740 pesos ($217.50, the
peso currently hovers around 8 to the dollar) with AMA members given 15
On-site seminars and one-and-a-half day sessions run to 3,240 pesos; a full two
days cost 4,050. Night courses cost 2,000 pesos. A two week management
course, offered twice a year, runs to 12,000 pesos ($1,500).
Direct mail remains the basic selling tool with delivery reliable and relatively
speedy. In Mexico City bulk mail is delivered in from 48 to 72 hours. Mail to
other locations can take up to 10 days.
Bulk mail is substantially cheaper than first class -- 1.05 pesos for up to 20 grams
compared to 1.80 pesos. The post office offers extra discounts for mailers who
send out more than 1,000 pieces a month.
Self-improvement courses, Zazueta said, are a hot item in Mexico today, largely
thanks to creation of the North American Free Trade Area (NAFTA).
"Ever since NAFTA was adopted people realize they need better training and
better skills to succeed."