Bits and bytes
-the next wave of imports to Japan
by Tom Spargo

I remember very clearly the first time I saw the World Wide Web. It was in 1994 while I was working for IBM Japan in their marketing division. I also remember my first thought, something along the lines that - thanks to this new medium - if companies anywhere can reach customers everywhere, international trade will skyrocket and Japan will benefit from the surge in individual direct importing. I even had a great idea for a website to sell American gourmet foods to the Japanese - I wanted to call it "America-ya."

Today, of course, this process has become well known as business-to-consumer e-commerce. Five years later, the surge in B-to-C e-commerce has yet to arrive in Japan, but according to some analysts, it may be right around the corner. MITI is forecasting that Internet-based e-commerce in Japan will soar from $71.90 billion in 1998 to $578.51 billion by 2003. But the key question here is how much of that revenue will come from foreign Net-based e-businesses? Or viewed from a US perspective, is Japan actually a good country to target for e-commerce, and if so, to what extent?

To get a better sense of what US e-business players are thinking about Japan, I recently attended a briefing here in San Francisco entitled "Trends in Direct Marketing/Internet Sales to Japan," co-sponsored by the Interactive Media Trade Association, JETRO, and the Commercial Service of the US Department of Commerce.

The main lesson I learned from the briefing is that there is now true recognition of Japan's importance in the e-commerce channel. Attendees at the briefing were from some very notable e-businesses, with the common theme that each is in the process of developing their Japan strategy. But whether these companies can successfully implement a Japan initiative is an entirely different matter. Each of the companies I spoke with stressed that while Japan is an important market, there are still many unknowns - Japanese Internet user profiles, legal issues, and taxes, to name just a few.

However, the emergence of service companies designed to facilitate foreign e-business interaction with Japanese consumers is a sign that the foreign Net businesses are ready. One such company is Bargain America led by Tom Sato, who gave a brief presentation at the meeting. Bargain America is dedicated to bringing American products to Japanese consumers over the Internet. Part of Tom's business is to help American e-businesses strategize for Japan, and it looks like he has more business than he can handle. Take a look at his website for some sage advice on approaching the Japanese consumer (www.bamerica. com/approach.html).

Another speaker at the briefing was Craig Thompson of Sales Support Services Inc. SSS provides outsourcing of customer service and much of the logistics process (distribution, warehousing, etc.) for foreign companies entering a local market. The company has a strong base of customers in traditional industries such as auto and fuel, but is now throwing its hat into the e-commerce arena. The company is about to open support centers in the UK and Japan, where it hopes to supplement existing foreign e-business initiatives.

I was surprised to see not only business but also government lining up behind the idea of foreign firms selling directly over the Internet to the Japanese. Frank Carrico of the US Commercial Service (CS) in Tokyo explained at the briefing that there is now a CS committee dedicated to promoting e-commerce. Japan is apparently a high priority as the CS is working closely with both JETRO and MITI on ways to make international e-commerce a reality. The other sponsor of the briefing, The Interactive Media Trade Association (a.k.a. MDG.org), is a non-profit group involved with facilitating the growth of new media business - and the organization has a lot of resources dedicated to the international space.

Several major US B-to-C companies -including N2K and Onsale - have already taken the plunge into Japan. Even eBay has announced support for the Japanese language on its sites. Softbank has had a lot of influence in bringing e-businesses to Japan, but there is still plenty of room for smaller operations to find their way across the Pacific. One example is Virtual Vineyards, which has been selling wine over the Internet directly to Japanese consumers for several years now.

With the right support and infrastructure in place from both the private and public sector, a sizeable portion of the e-commerce boom in Japan may come from US e-businesses selling their wares and services to the Japanese consumer. Pretty soon, Japanese consumers won't have to wait until their next kaigai-ryoko (overseas vacation) to stock up on their favorite American beef jerky and chocolates. Perhaps it's time for me to dust off my business plan for America-ya and make a go of it?

Tom Spargo is president of geomarkets.com, Inc. - a San Francisco-based venture dedicated to advising e-businesses on globalization. Contact him at tom@geomarkets.com.

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