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Direct Selling in Japan

Japan direct selling market: Value sales declined -3% during 2012


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2014-02-18 11:09:03 - Direct Selling in Japan - a new market research report on companiesandmarkets.com

Japan Consumers Cooperative Union continued to lead the Japan direct selling market in 2012. The cooperative operates in multiple channels including store-based retailing, internet retailing, homeshopping and direct selling. Among sales orders made by phone or fax, sales of its private label products are categorised under direct selling, while those of branded products fall under homeshopping.

While Japan Consumers Cooperative Union is most well known for its home delivery of grocery and other daily supplies such as toiletries, the cooperative also strengthened its meal home delivery service. With the growing population of elderly consumers, Japan Consumers Cooperative Union saw a large potential in meal home delivery service and emphasised that its delivery personnel can also check on the safety of elderly

 

 

Japanese consumers in single- person households. In Kobe, 10,000 meals per day are sold at prices ranging between ¥500 and ¥700. In Hokkaido, Japan Consumers Cooperative Union typically receives 5,000 orders per day from its 10,000 registered members. Japan Consumers Cooperative Union aims to double its home delivery meal users by the end of 2012.

Value sales of direct selling declined by 3% in 2012. The number of reported dishonest business practices increased in direct selling over the last decade, resulting in a negative image of the industry as a whole among consumers. In particular, elderly consumers are typically concerned about health and are often lonely. As retired individuals stay at home most of their time, they are more vulnerable to unsolicited sales by selective fraudulent direct sellers.

With retirement savings, elderly consumers in single-person households become most attractive targets. According to National Consumer Affairs Centre of Japan (NCAC), over 130,000 complaints were received from consumers aged over 70 years in 2010, and among those reported incidents, direct selling ranked the number one cause of complaint followed by sales inducement over the phone. The number of complaints collected by NCAC more than doubled over the last decade, further exacerbating the direct selling industry´s poor reputation among consumers.

Value sales of direct selling are expected to post a negative CAGR of 2% over the forecast period. The growing number of reported complaints to NCAC demonstrates the depth of problem the industry is facing. Unless clear communication is conducted with consumers, they may feel under pressure to make unnecessary purchases and associate direct selling with a negative image even if they do not make purchases during visits. Direct sellers will need to work on improving the industry reputation to maintain business in Japan.

Although further regulation may hinder sales activities of benevolent direct sellers, the loss of reputation far outweighs in cost in terms of acquiring new clients. However, Japan Consumers Cooperative Union is often regarded as a homeshopping player rather than a direct seller by consumers and is unlikely to suffer from reputational risk in association with direct selling. All the other direct sellers will be required to deal with the negative image of the industry and work hard to improve industry standard over the forecast period.

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Mike King
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