I first went to Japan in 1985 to look into prospects for a test program one of my clients wanted to launch. With no experience in the market, getting a firsthand view seemed a good idea.
The trip was amazing. Large Japanese companies did a lot of high-level direct marketing even though the country did not have a developed DM infrastructure — at least from a US perspective. In those days almost no business came from abroad and nobody ever thought it would.
A lot of things have changed over the last 15 years but not the opportunities that the market offers. It is immense and extraordinarily direct responsive. Japan has almost 10 million businesses. The US with double the population has 12 million. These businesses range from tiny shops run out of the owner's home to mega-corporations that dominate global business. And business-to-business is the country's most untapped market.
While many American and European companies have tested the Japanese market, only a few have found long-range success. They tend to be those who are extraordinarily successful at home.
True, in the early '90s many US companies enjoyed a free lunch in Japan and managed to accumulate unnaturally high profits with low risk. But in the end business fundamentals prevailed.
Organizations focused on high customer satisfaction and high-quality products and services have done extremely well. Those looking for the fast buck may have enjoyed some success, but failed to build a long-term solid business.
Many people talk about currency fluctuations and act as though this is one of the drivers of direct marketing success or failure in Japan. While it is certainly a problem, it has little to do with business fundamentals.
Foreign marketers have one other great advantage over their domestic competitors — low postage rates offered by Royal Mail and the U.S. Postal Service that allow off-shore DMers to mail into Japan for a fraction of what it costs a domestic Japanese company. Prospecting and business-building can be undertaken at a fraction of the cost the home-team player experiences.
Like any new market, Japan puts up barriers heightened not only by a different culture but also by the language. Many marketers have attempted to “Romanize” their files, which can make it a little easier to service things at the home office, but it doesn't enhance the customer's experience, although things are better today than 15 years ago.
Back then, there were not any of the software programs that are available today that make it easy to handle Japanese and Romanized characters together.
Fortunately, there are relatively inexpensive software programs today which allow for native Japanese language processing and output. Windows is available in a Japanese version and works just great.
Almost every other major software program can be picked up, and the applications make everyday business easy, as do domestic call centers and the availability of reliable, timely delivery of packages from US fulfillment centers courtesy of the USPS.
So much for an American-only perspective. I got the Japanese view at a recent dinner in Tokyo when we discussed the fundamentals of direct marketing over the past few years and what is likely to happen in the immediate and not-so-immediate future.
Ryosaku Negishi of Genesis, a high-quality list service company, is concerned about the immediate effect of the new privacy guidelines coming down in Japan. He also worried about pending postal rate increases (does this sound like a marketer in any other country?).
Masanari Ishikura of Nikkei, the gigantic Japanese publisher, also worries about privacy and postal rate hikes, but is bullish on Japan's chances to jump ahead of the US and Europe in e-marketing.
He is not alone. Japanese companies are taking a hard look at the Internet, even though many are not sure how to make money on it. They have one built-in advantage: more people as a percentage of population are on the Web than in the US.
This is in no small part thanks to the proliferation of phones which are e-mail and Internet accessible. In absolute numbers, there are more hand-held Internet users in Japan than anywhere else. While the balance of the Japanese direct marketing business is 10 years to 15 years behind the US, initiatives using this new technology are cutting edge and state-of-the-art in Japan because of the splendid and huge domestic market.
One does not have to be in Japan for more than a day to be overwhelmed by the number of people using phones for wireless text/e-mail/Internet access. It is unbelievable to be riding the subway system or the trains early in the morning or late at night and see people either keying away on their very small phone keypad or plugging in one of their ultra-portable keyboards and screens. There are definite limits to the graphics and text that can be transmitted, but the number of people who not only have access but also are actually online is phenomenal.
Motohide Ishii, also of Nikkei, indicated it is moving forward with a number of e-marketing initiatives. It is using this for internal promotion and starting to rent its files.
Because many of their target readers are hi-tech/computer-engineering types, they have a built-in high acceptance rate for hi-tech-related programs and messaging. This undoubtedly will open up new opportunities, not only for Nikkei, but also for many other organizations.
It is interesting to see the Japanese market developing — concerns about privacy, postal costs and taking advantage of emerging conventional and wireless Internet technologies certainly seem to be the correct focus for leading-edge direct marketers. It will be very interesting to observe the developments in Japan over the next 15 years.
• Jonathan Lambert is chairman of Acton Group, an international direct marketing company.
