Rather than reinvent the wheel, the industry should note how the Japanese pioneered distribution.
By Jeff Henderson & George Tastard
While representing American manufacturers in Japan during the mid-1980s, I tried to figure out how Japanese companies were able to get so many of their manufactured goods into thousands of cities worldwide.
To say that their products had astounding distribution would be an inadequate use of available adjectives. Their penetration of worldwide markets historically had a mathematical precision born of a cultural business system long-established in Japan but still relatively unknown to the rest of the world: the sogo shoshya.
Known in English as “trading houses,” these massively capitalized, partially bank-owned conglomerates were the reason that small-and then internationally unknown-Japanese manufacturing companies were able to get their products on store shelves worldwide.
By setting up dozens of overseas offices, these companies, guided by the Japanese External Trade Organizations (JETRO), were able to bring visibility to a cross-section of products that business cultures in other countries would not have been able to foment on a worldwide basis.
The Japanese way
Who were these trading houses that helped small companies get started until they established worldwide distribution?
Sumitomo, Mitsubishi and Mitsui are now house-hold names because of what they were able to do. These sogo shoshyas became as famous as the Japanese products that they bought and sold. And that, in turn, attracted a stream of strategic alliances, some of which were not even related to international trade. (The parallels to some of the bigger players in the international DRTV business are obvious and will become more apparent as our industry matures).
This phenomenon did not go unnoticed by business communities in other countries.
After World War II, the Korean government, despite the Japanese occupation still fresh in its memory, studied this model and began to export its manufacturers’ products.
In the United States, however, preoccupation with trade restraint and unfair business practices meant that the creation of the legislation that would enable companies to compete with similar entities was delayed.
The government finally responded with the Export Trading Act of 1982.
Despite the fanfare, such a radical approach never took hold. The act never materialized into the export delivery system that the Japanese had developed over several decades.
The U.S. translation
Nonetheless, where public policy did not work, decades of entrepreneurial gestation, in the form of DRTV, eventually evolved into this bargain: We will go into the home first, and later we can worry about going into retail stores in a comprehensive way.
But more than a decade later, the industry is still facing the same Gordian knot: How do we systematically transfer the aura that “As Seen on TV” products have into an omnipresence on retail shelves worldwide?
Just as Sumitomo and Mitsubishi reconfigured and networked their companies to include DRTV, so must the industry as a whole consider other approaches to this intricate problem.
While private initiative is laudable (and usually the first instinct) in any entrepreneur, worldwide syndicators of DRTV shows and retailers might want to try accessing each other with a little help from an organization not previously considered: The United States Department of Commerce.
The Department of Commerce has more than 90 offices in the United States and more than 130 offices worldwide with some 1,400 employees offering an array of customized solutions to the back-end challenge. Two notable ones for our industry are:
- Gold Key Service: The applicant is provided with pre-screened appointment with key decision makers of the retail stores/chains.
- Matchmaker Service: The applicant is matched with potential business partners from a host country.
Where to look
The best way to start the process is to take a look at the Web site http://www.ita.doc.gov/tic to learn what is available. This will help business determine how to best utilize the department’s services. And for those companies located in the United States, a toll-free number, 800-872-8723, provides documents via fax machine or access to a trade specialist. These experts can discuss marketing goals and alliances that your company is trying to achieve on a country by country basis.
The DRTV industry in the 1990s is the closest thing that marketers have to emulating what Japan has done internationally for decades.
In order for the DRTV industry to achieve the longevity and depth of penetration of the sogo shoshyas, the industry cannot be overly reliant on phoned-in credit card buyers from homes around the world.
A detailed approach to retail stores overseas must become an integral part of DRTV sales networks, and the Department of Commerce is one way to bring this about in a systematic manner.
Copyright 1997 © Jeff Henderson All rights reserved.