Many direct selling retailers operate a network business model. However, this model does not have a good reputation amongst Japanese consumers, partly as a result of retailers using this kind of model being occasionally charged by the authorities or going bankrupt and leaving people in debt.
While prospects are not very bright for direct selling, situations of rapid development often involve an associated swing back trend and, as the digital channel has grown strongly, some consumers and retailers have shown a renewed appreciation of direct selling. Pola, for example, grew as a direct seller towards the end of the review period, though, notably, direct selling is no longer the company’s largest source of revenue, as it emphasises its in-store sales through the Pola Beauty and Esthe In outlets.
OMO, or online merges offline, is a term often used in talking about offline retailers utilising internet retailing, not as a simple shift from offline to online but as an overall strategy of using multiple channels in an effective and integrated way to enhance consumers’ experience of their business. Similarly, direct selling retailers are operating solely, or even primarily, in a “direct” face to face way today but also integrating internet retailing into their operations.
Avon Products Co Ltd is a company selling Avon branded products in Japan. This Japanese entity has been outside the global Avon group since 2010 due to an acquisition, and became the object of a new acquisition in 2018 when it was purchased by the South Korean company, LG Household & Health Care.
At the end of the review period, Amway retained the leading position in Japan that it has held for years. Amway is not only focusing on direct selling activities but is putting energy into developing a physical presence in the market.
Amway’s focus on the development of physical environments for consumers to experience its products illustrates an important trend in retailing and one which is further driving direct sellers to engage in multi-channel approaches. Experience is becoming a keyword in retailing, as retailers look to find points of differentiation from the rapidly expanding internet retailing channel, in which consumers do not have direct access to products.
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This industry report originates from Passport, our Retailing market research database.