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Direct Selling in Japan

Japan direct selling market declined by 3% in 2013


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2014-04-30 03:25:04 - Direct Selling in Japan - a new market research report on companiesandmarkets.com

Direct selling declined in current value by 3% in 2013. Demand for direct selling in Japan has been declining consistently over the course of the last decade, with various factors influencing this decline. One of the major obstacles faced by direct selling companies in Japan is the negative image of direct selling which has resulted from widely reported incidences of dishonest business practices among rogue direct sellers. According to National Consumer Affairs Centre of Japan (NCAC), 106,572 complaints related to direct selling were filed in the country during 2011. The most vulnerable consumer segment is elderly people, many of whom tend to stay home alone during the day. The tendency to attempt to swindle the elderly is particularly prevalent among

 

 

single level marketing direct selling operations. Consumers aged over 70 years old accounted for 36% of the total number of complaints relating to direct selling through single level marketing schemes reported to the NCAC during 2011. Some elderly Japanese people even purchase products just to have direct selling agents keep them company. Others have dementia, which prevents them from being able to make an informed purchasing decision. Even though this data has not been updated since 2011, such predatory tendencies among rogue elements in Japan´s direct selling landscape continued to reinforce the negative image of direct selling among Japanese consumers during 2013.

Japan Consumers Cooperative Union maintained its leading position in direct selling in 2013 with a 27% value share. The company operates in multiple retailing channels, including store-based retailing, internet retailing, homeshopping and direct selling. Among sales orders made by telephone or fax, sales of its private label products are categorised under direct selling, while those of branded products fall under homeshopping. With the growing population of elderly consumers among the Japanese population, Co-op Mirai started its order-taking service in Saitama prefecture in 2011. As part of this service, Co-op´s customer service personnel place phone calls to its registered customers on a regular basis, taking orders from those who wish to order products, delivering any products ordered to the doorsteps of customers on the following day. The service has been praised as a way of supporting lonely elderly people and preventing the unfortunate unattended deaths of elderly people living on their own as customer service and delivery personnel can regularly check on the safety of elderly customers. Although the company´s value sales declined by 1% in 2013, such an innovative business targeting the elderly is very promising in Japan and is expected to contribute to the company´s positive growth during the forecast period.

Direct selling in Japan is expected to decline in constant value at a CAGR of 2% over the forecast period, falling to Â¥1.5 trillion in 2018. Improving the image of direct selling is one of the most urgent tasks for Japan´s direct selling companies, slowing down the pace of decline in value sales. As the majority of the complaints about aggressive and pushy rogue direct selling agents are reported by members of Japan´s elderly population, it is essential for the country´s direct sellers to establish their image as being friendly to the elderly population. In addition, the proportion of the Japanese population aged over 65 years old is expected to rise to 28% of the country´s entire population in 2018, according to projections prepared from Euromonitor International data. As such, one key strategy for direct selling companies during the forecast period is set to be tailoring direct selling formats to be useful and helpful for the country´s elderly population. As an example, not only direct sellers but also companies engaged in other industries are launching order-taking services in addition to their main businesses. As Japan´s elderly people tend to face difficulties when purchasing groceries and commodities at supermarkets, these order-taking services have so far been highly appreciated. Other promising products for the order-taking service are consumer health products given the increasing popularity of vitamins and dietary supplements among elderly people. In order to wipe out the negative image of direct selling, direct sellers are expected to offer services that meet the elderly people´s needs.

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