L.L. Bean Puts Scaled Down Japanese Business Plan in EffectTOKYO - L.L. Bean is scaling back direct involvement in its Japanese operations and turning the bulk of its catalog business over to L.L. Bean Japan, a joint venture between Seiyu and Matsushita Electronics.
The two companies announced last month they had signed a license agreement giving LLBJ a much larger role in catalog sales, which L.L. Bean had been conducting by itself from Freeport.
Earlier this year L.L. Bean bought a 10 percent stake in LLBJ, the first time the US company has formed a financial partnership with a foreign firm.
LLBJ runs the Maine-based apparel maker's retail operation in Japan with store-sold product developed jointly by the two companies. Catalog products, however, were and will be the same as those in the catalog sent to US consumers.
Nevertheless, major changes are being made this month. L.L. Bean will no longer sell a dollar-denominated catalog. Goods may be bought in yen and shipping charges will be collected on a yen basis - 600 yen instead of a series of charges ranging from $19 to $79.
The company also introduced toll-free numbers in Japan and arranged for returns and exchanges on catalog sales to be handled by LLBJ in Japan rather than sent back to the US.
"What we are doing is changing our business model for catalog sales in Japan to improve business and to offer our customers new benefits," Tom Harden, L.L. Bean's executive vice president, said on a recent visit to Tokyo.
LLBJ, Harden added, will run the call center and the company's fulfillment operation in Japan, while "we will stay in touch with the marketing and handle the creative side of the business."
The Japanese catalog will be developed in the US, Harden explained, down to writing the copy in Japanese and laying out the art work, with printing and mailing of the book done by LLJB in Japan.
"LLBJ will accept orders and collect payment. I would say the contract we have concluded for the catalog business is basically the same one we have for our retail outlets."
Since products in the Japanese catalog will be the same as in the US, book orders will be sent electronically every day from Japan to Freeport. Products are bulk mailed to Japan where LLBJ will repackage them and ship to buyers.
Harden said that his company had dropped catalogs 10 times in 1998 but that as part of the new business plan it would reduce the number of drops this year to eight.
He decline to disclose the number of books L.L. Bean plans to mail but conceded that the number might be lower than in previous years.
The shift to yen-based sales was mandated by uncertain exchange rates, Harden said, and by the fact that today Japanese customers rarely buy anything from a dollar-denominated catalog.
L.L. Bean had tested a kids catalog in Japan but never rolled it out. Asked if there was room for such a book in the new business plan, Stuart McGeorge, General Manager for International Business, said he was considering doing so.
"In the US, we are running solo kids catalogs and a kids insert in the main catalog, but right now we have a simpler business model in place for the Japanese market so we'll stick with the general catalog at the moment. We hope to send a solo catalog and other niche books later."
L.L. Bean was spectacularly successful in Japan in the mid-nineties with catalog sales rising from $60 million in 1993 to $125 million in 1994 and peaking at $195 million in 1995 when the dollar sank to 80 yen.
Harden declined to comment on specific numbers but conceded that catalog sales had been decreasing since 1995. He projected sales for stores and catalogs of 15 to 20 billion yen this year and next (roughly $120 to $130 million).