The distribution and sales channels in the Japanese market are crucial considerations for any company intending to grow in the country.
If you need help figuring out where to begin, this article is a great piece of guidance.
Over the past two decades, there has been significant consolidation in Japan’s distribution networks. Distribution for consumer and industrial goods uses quite different channels.
Understanding Distribution Channel
A distribution channel refers to moving products or goods from manufacturer to supplier to end-user or consumer. In a simple explanation, it is the network of how the products we buy in supermarkets, convenience stores, etc., end up in our hands.
Distribution channels can vary depending on the types of products being sold. Since every product differs from the other, the target market also differs. Considering these, a company should be able to determine the right distribution channel to use. For example, consumer goods like food, clothing, and household items may be sold through retail stores, supermarkets, or online marketplaces. Industrial products like machinery or equipment may be sold through specialized distributors or wholesalers.
If Japan is where you want to distribute your products, you need to note that cultural norms and practices can heavily influence it. For example, traditional distribution channels like the “keiretsu” system (where large corporations have a network of affiliated companies) are still prevalent in certain industries.
Types of Distribution Channels
In Japan, distribution channels are highly specialized and can be complex. The most common channels include wholesalers, retailers, and trading companies. It’s important to note that relationships and trust are highly valued in Japan, so building strong relationships with your distributors is crucial for success.
Wholesalers are typically the first point of contact for foreign companies looking to enter the Japanese market. They typically purchase goods from foreign companies in large quantities and then distribute them to retailers or other businesses. On the other hand, retailers sell directly to consumers and can be found in shopping centers, department stores, and other retail outlets.
Trading companies, also known as “sogo shosha” in Japan, are unique to this market. These companies are involved in various business activities, including distribution, import/export, and financing. They can be a useful partner for foreign companies looking to enter the market as they often have extensive knowledge of the local business culture and can provide valuable support and guidance.
Another important consideration when entering the Japanese market is e-commerce. While traditional brick-and-mortar stores remain popular, e-commerce is growing rapidly in Japan. Companies looking to enter this market should consider establishing an online presence and working with local partners to ensure their products are marketed effectively.
"Otsumami" - a bite size snack:
Expanding into the Japanese market can be a lucrative opportunity for foreign businesses. However, it’s important to understand this market’s unique distribution and sales channels and build strong relationships with local partners. By utilizing the resources available in the SME Japan Guide, businesses can navigate this market with confidence and success.