Issue of Distribution Channel in Consumer Goods Market in Japan
You may suppose that distributors are always searching for new products all over the world in order to expand their businesses. However, that expectation does not fit Japanese distributors. In most of cases, they actually do not have enough power to sell new products to major retailers.
Here is a schematic of a typical distribution channel in the Japanese consumer industries. The winner of the game in which manufacturers compete to take a larger share on retailers’ shelves is determined by sales activities of the manufacturers, not distributors.
The main functions that distributors undertake are settlement of accounts and logistics. After a basic agreement to adopt new products is reached between manufacturers and retailers, distributors adjust the details of the transactions such as delivery and payment. The reason for this division of labor is thought to be the number of products that distributors sell, which is very large.
The another reason comes from the geographical characteristics of Japan; its limited territory and high population density allow manufacturers to have at least several sales offices in cities such as Tokyo, Osaka, Nagoya, Sapporo, Sendai, Hiroshima and Hakata. Therefore, they do not need to rely on distributors for sales; as a result, distributors have been gradually reducing the number of sales staff.
Furthermore, most distributors do not have an importing function, which means you need to find an importer. The reason distributors do not import goods directly is that they have not needed to do so. There are so many Japanese manufacturers with some outsourcing production to other Asian countries, and they have been enough. Through this additional layer of distribution, your product may lose the competitive edge in pricing.
Of course, we can support your distributor search in Japan, but we highly recommend you to have your Japanese office run by us. This will also give you peace of mind that you hired highly experienced sales representatives for a reasonable price.