Why Japan May Be Your Next Major Growth Curve

Understanding The Japanese eCommerce Market

Mar 3, 2022 12:00 PM1:00 PM EST

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Key Discussion Takeaways

Are you an international brand struggling to enter the growing Japanese market? Have you tried and failed before? There is a strategy for successfully running your brand in this market, but do you know what it is?

The Japanese market is growing at a very high speed and brands are anxious to break into it. But, this is easier said than done. As a brand, you need to understand the nuances in the Japanese market for you to succeed in it. Cue Orr and Tommy Vogtman of Mamenta say that this will be the next major growth curve for a lot of brands.

In this virtual event, Aaron Conant sits down with Cue Orr, the Vice President of Global Marketing and eCommerce at Mamenta, and Tommy Vogtman, the Director of Japanese Operations at Mamenta, to talk about the Japanese market. They discuss the ins and outs of the Japanese eCommerce market, the product categories that do well in the Japanese market, and the challenges that brands face when trying to enter this space in particular.

 

Here’s a glimpse of what you’ll learn:

 

  • What is Mamenta and what does it offer to its clients?
  • Cue Orr and Tommy Vogtman talk about the Japanese eCommerce market
  • The reasons why there are fewer international brands joining the Japanese market
  • Product categories that perform the best in the Japanese market
  • The challenges that brands face when trying to enter the Japanese market
  • Other market places that brands should look at apart from Rakuten in Japan
  • How long does it take for a brand to launch in this market and how much does it cost?
  • Should you enter different marketplaces in Japan all at once?
  • Digital advertising and the percentage of ad spend in Japan
  • Japan’s sales revenue potential and how Mamenta helps
  • The overview of the distribution model in terms of the logistics and importation process
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Event Partners

Mamenta

Mamenta's Infrastructure as a Service (IaaS) extends brand's reach into over 250 marketplaces and 70+ countries through our pre-connected multi-channel commerce network. The platform optimizes operations to achieve highest returns while enabling brands to deliver a consistent customer experience across the globe.

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Guest Speakers

Aaron Conant LinkedIn

Co-Founder & Managing Director at BWG Connect

Aaron Conant is Co-Founder and Chief Digital Strategist at BWG Connect, a networking and knowledge sharing group of thousands of brands who collectively grow their digital knowledge base and collaborate on partner selection. Speaking 1x1 with over 1200 brands a year and hosting over 250 in-person and virtual events, he has a real time pulse on the newest trends, strategies and partners shaping growth in the digital space.

Cue Orr

VP of Global Marketing and eCommerce at Mamenta

Cue Orr is the Vice President of Global Marketing and eCommerce at Mamenta, a company that specializes in global eCommerce solutions. Mamenta helps businesses transition seamlessly into the global marketplace with a fully integrated platform that allows for full control over operations from one place.

In his role, Cue builds and manages cross-functional teams to implement and maintain all aspects of an online brand through channel growth, sales, and brand awareness. As a global digital brand strategist and international eCommerce professional, he has experience in a variety of product categories, including consumer electronics.

Tommy Vogtman

Sr. Director, APAC Operations at Mamenta

Tommy Vogtman is the Senior Director of APAC Operations at Mamenta. Working in the Japanese market for over 25 years, he spends most of his time focusing on partnership development and go-to-market strategies for enterprise accounts. Tommy has been deeply involved in taking Japanese companies, products, solutions, ideas, and technologies to the US and global markets.

Event Moderator

Aaron Conant LinkedIn

Co-Founder & Managing Director at BWG Connect

Aaron Conant is Co-Founder and Chief Digital Strategist at BWG Connect, a networking and knowledge sharing group of thousands of brands who collectively grow their digital knowledge base and collaborate on partner selection. Speaking 1x1 with over 1200 brands a year and hosting over 250 in-person and virtual events, he has a real time pulse on the newest trends, strategies and partners shaping growth in the digital space.

Cue Orr

VP of Global Marketing and eCommerce at Mamenta

Cue Orr is the Vice President of Global Marketing and eCommerce at Mamenta, a company that specializes in global eCommerce solutions. Mamenta helps businesses transition seamlessly into the global marketplace with a fully integrated platform that allows for full control over operations from one place.

In his role, Cue builds and manages cross-functional teams to implement and maintain all aspects of an online brand through channel growth, sales, and brand awareness. As a global digital brand strategist and international eCommerce professional, he has experience in a variety of product categories, including consumer electronics.

Tommy Vogtman

Sr. Director, APAC Operations at Mamenta

Tommy Vogtman is the Senior Director of APAC Operations at Mamenta. Working in the Japanese market for over 25 years, he spends most of his time focusing on partnership development and go-to-market strategies for enterprise accounts. Tommy has been deeply involved in taking Japanese companies, products, solutions, ideas, and technologies to the US and global markets.

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Aaron Conant

Co-Founder & Managing Director at BWG Connect


BWG Connect provides executive strategy & networking sessions that help brands from any industry with their overall business planning and execution.

Co-Founder & Managing Director Aaron Conant runs the group & connects with dozens of brand executives every week, always for free.


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Discussion Transcription

Aaron Conant  0:18

Happy Thursday everybody. My name is Aaron Conant. I'm the Co-founder and managing director here at BWG Connect. We're a networking and knowledge-sharing group with thousands of brands who do exactly that. We network and now cheer together to stay on top of the newest trends, strategies, pain points, whatever it is shaping digital. I talk with about 30 to 40 brands a week to stay on top of those trends. And when the same topics come up over and over again, that's where we get the ideas for these calls the topics for them. And that's our dinners as well, even some happy hours that we do. So we'd love to have a conversation with anybody on the line today, kind of figure out what your pain points are, and kind of get ideas for next topics. We're planning most things no more than eight weeks out, so we can stay incredibly relevant. A couple housekeeping items as we get started. The first one is a; we're starting this three to four minutes after the hour. And just so you know, we're gonna wrap up with three to four, maybe even five minutes left in the hour as well, we're gonna give you plenty of time to get onto your next meeting without being late. The other thing is we want these to be as educational informational as possible. So at any point in time, if you have any questions, don't hesitate to drop them into the chat, drop them into the question section. Or you can always email me aaron@bwgconnect.com, and that includes an hour after the call tomorrow, next week, anytime you have a question in the digital space, never hesitate to reach out. But if you want to answer during this call today, please send it over during the call. With that, we're going to kind of kick it off here. So this idea of international expansion really ramped up in calls that I've been having over the past six to eight months with a huge interest in hey, Amazon's really big here Walmart. It's okay, for some people, a lot of people, if you're outside of a grocery run isn't fantastic, Target is closed, some people can handle direct consumer, some can. And so there's been this huge focus on international expansion. And we've done calls on China, the EU, but more recently, a lot of interest in Japan as a whole huge market there. And a lot of interest in econ across the board. And so also a great market for a lot of us brands. And so we've got some great friends, partners, supporters of the network over at Mamenta, who are helping a lot of brands enter the Japanese marketplace today. And so just thought it'd be great to have them on to kind of give us some pointers. Give us some ideas on what works, what doesn't work, how big the market is. And overall just knowledge share with us. So Cue, I'll kick it over to you first if you want to do a brief intro on yourself. And then we can kick it over to Tommy and we can jump into the conversation sound good?

Cue Orr  2:47

Definitely. Thanks for having us. I'm Cue Orr, VP of Marketing and eCommerce for Mamenta. I've been with the company since the inception in 2015. And I've been in eCommerce, specifically the past 12 years and marketing over the last 20 years. So I'll turn it over to Tommy for a little intro as well.

Tommy Vogtman  3:10

All right, yes, thank you happy to be here. I'm the Director of Japanese operations for Mamenta. And quick background about myself, I was born and raised in Japan, I've been working with the Japan market for over 25 years. Much of my time was spent focusing on partnership development and go-to-market strategies for enterprise accounts. I've been deeply involved in taking Japanese companies, product, solutions, ideas, technologies into the US market and to the global market, as well as bringing international companies into the Japanese market. I'm fully bilingual by cultural at the native level. I'm fascinated by global trade has always been since I'm just growing up not just products, but ideas, data, technologies, people, and at the end of the day, creating solutions for real-life problems and challenges. So, thank you. Yeah, really excited to be here today.

Aaron Conant  4:08

Yeah, awesome. And just a reminder, for those who joined, if you have questions, don't hesitate to drop into the chat, the question section or email them to me aaron@bwgconnect.com. So we have some material here, I'll kind of kick it over to you Cue to kind of walk through these and just, if people have questions along the way, just drop them in, and we'll answer them in real-time. So Cue, I'll kind of kick it over to you.

Cue Orr  4:32

Yeah, definitely. So we want to discuss why Japan may be your next major growth curve and understanding the Japanese eCommerce market more in-depth. So to kick it off, we'll talk a little bit about who we are as Mamenta, we're a complete SaaS platform enabling global commerce. Mamenta seamlessly connects brand data and inventory positions in a global marketplace. is expanding revenue, accelerating access to new markets and maximizing profits. So typically, what we see as the global problem for brands internationally is two things. They have either disparate systems or they have low global reach. A lot of times major international companies will have grown the brands multinationally, through brick and mortar, creating disparate infrastructure and their systems. And they're not talking to each other. And it just makes it hard to expand. On the other side, we have mid-market brands that are looking to expand internationally or just expand within their own country. But they just have lack of visibility, lack of resources to help expand wherever they want to go. So part of that problem is this solution. The global eCommerce access that Mamenta provides is unparalleled. We are on 260 marketplaces, internationally in 70 countries. And we have a network of 75 plus distribution centers around the world where you can park your product and then actually ship it. And breaking down our solution, the Mamenta global trade platform, basically, what we do is we sit between the brand and the marketplace, enabling the brand to communicate, catalog price, inventory orders and shipping into our global trade platform, which we then can distribute to anyone in charge of 60 plus marketplaces around the world. So that was just a little brief intro about who we are as momenta. Now we want to kind of get into understanding the Japanese eCommerce market. And for that, I'll kick it over to Tommy to go a little bit more in-depth.

Tommy Vogtman  7:14

Yeah, thank you Cue. Yes. So Japan's a interesting market, it sounds there's like this mysterious feel to it. But it's really not. And while there's quite a few cultural differences and nuances that companies should be aware of entering the Japanese market, you're really my main message today is that it's not as difficult or challenging as we may think. And if we plan and do the right things, and work with the right partners, the Japanese market is a prime market to enter. And today, really our discussion, focus today is the opportunity in Japan, and how Mamenta can help you grow your business inside Japan. The Japanese market is robust, it's growing year over year, and cross-border eCommerce is increasing, and due to the extremely high Internet penetration rate and digital-savvy consumers. So to put things in perspective, here's some facts, Japan has a population of 125 million. And just to contrast the US population, our population is 329 million. So while Japan's population is about 1/3 of the US, the US our surface area is 26 times bigger, so you can just imagine the density of the Japanese population, it's pretty packed together. GDP wise, Japan is the third-largest economy in the world after US and China, with a GDP of $5 billion. And Japan has a 93% Internet penetration rate with 117 million internet users. If you think about it, that's a lot of internet users. And even with a aging population, Japan is very, very digital-savvy. Now, let's talk about eCommerce for a second. Japan is the fourth-largest, with $144 billion eCommerce market. And it's while trailing China and the US market. It's still a extremely, extremely large eCommerce market and it's growing at about 15% annual growth rate. Japan's domestic eCommerce market is thriving with growth in foods, personal care, fashion beauty products, what else toys, electronics furnitures amongst other categories.

Aaron Conant  9:43

So I have a question. Why haven't more brands gone there? But why is this behind? I mean, I see the UK I can see China's ahead of it, but this should be right at the top and yet it's not, it's just coming up more and more in my conversations right now, right? Like are other added restrictions that are in there, are there this mindset or this thread that it's harder to get into, or it's more restrictive. It seems like a very natural, especially you think everything has to be delivered, you're at 26, the size land, like delivery would be easier. Like, in your opinion, you live there, you lived here, why are more US brands going there?

Tommy Vogtman  10:31

Good question, right. And the companies who solve that problem, I think, is going to thrive. And it's because it's really understanding the unique aspects of the Japanese market, for example, Japanese consumers has access to spendable income, at the same time, they're very quality conscious. This isn't to say that pricing is not important because it is, and the younger Japanese generation is finding ways to shop cheaper, or sell in general, Japanese consumers take time to assess the quality and reliabilities of products before they purchase. So decisions are made on quality, value, packaging, style, review, review is very important. And Japanese consumers rely heavily on reviews and what other people say about the products after-sales care, that's really important for Japanese consumers where Japanese consumers expect fast acknowledgement response, when they asked questions. Japanese consumers tend to be skeptical of trust in businesses, and therefore business, they need to go out of their way to show their value to the customer. Transparency is really important. But for brands, it's really important to ensure that customer reviews are accessible. The typical Japanese consumer is very curious, concerned about what other people are purchasing, and what other people are saying about it. So having detailed information about your product, very important. So providing assurance, building trust, extremely important in Japan, Japanese consumers also tend to be loyal. So these marketplaces, they have reward systems, it works really well in Japan. And another aspect, this is very unique to Japan, and a very important data point in perhaps even music to our years, is there a very low return rate, compared to eCommerce return rate of 25 to roughly 40% in the US, the average eCommerce return rate in Japan is around 4%, just 4%. So, back to what I was talking about, you know, Japanese consumers closely examine the reliability, quality of the product before they purchase, but once they purchase, they tend to keep it.

Cue Orr  12:51

Okay, until your question, Aaron, the people that we've talked to at Mamenta, and just people out there in the space, a lot of it, the reason they haven't gone, there is just lack of knowledge and lack of understanding of these nuances, and that's what we try to do is you try to educate people and help them understand these different markets, especially the opportunity in Japan, and understanding those nuances helps your brand be successful, and when you decide to launch. But for the most part, it's lack of knowledge, just lack of understanding the size and opportunity there. You see China talked about a lot and the eCommerce space. And Japan doesn't necessarily get that notoriety. But it's right there. So people have been focused on China for last 10 years as that international play. But Japan's been sitting right there waiting and growing. And brands are going in there and being successful. So I just think his lack of knowledge and lack of understanding, but that's what we're here to do is help bridge the gap.

Aaron Conant  14:04

So the question comes in is this primarily cross-border trade or is repackaging required?

Tommy Vogtman  14:11

It's cross-border, and it's a growing market. So what depends on the type of products and there's many factors, right, the type of products of course, where's it stored, and so forth. But we're talking about the opportunity for cross border.

Aaron Conant  14:28

Okay. Awesome. So, if you have an idea around, what are those product categories that are going to do the best or that you see doing the best I mean, you'd listen. A lot of growth across I think four different ones on a previous slide, other categories that you say hey, this is a no brainer, like these are ones 100% you should take, these are ones that pay should do okay. And then these are like hey, just profit margins, not there or demand isn't there. I would love to know any thoughts there?

Tommy Vogtman  15:04

Sure. So, this is I think where research is necessary top categories are electronics, apparel, fashion, beauty, furniture, leisure, hobby, baby products, home improvements, and so on. Dependents also a luxury market, for example, Louie Vuitton earns 50% of their global revenue from the Japanese market. But surprisingly, not all luxury brands are successful in Japan. During the onset of the pandemic, we saw this interesting article that was published where spoke about luxury brands not quite embracing the Japanese eCommerce market, and regretting their late entrance and now rushing to get in by investing in digital channels. Back to your question, Aaron, there are products that's probably not going to sell too well, in Japan, for example, like cricket, sports goods, that's not a major sport in Japan. But things do shift. We saw this, it was really interesting, prior to the 2020 Summer Olympics, which actually took place in 2021 in Tokyo skateboarding, by the way, the skateboarding major debut at that Olympics, and prior to the Olympics, skateboarding was somewhat popular in Japan, but nowhere near the level of what we see here in the States. And then it seemed like out of nowhere, Japan won three gold medals. And now it's a big sport, you see all these kids skateboarding all over the place. So skateboarding brands and companies who capitalize who position themselves in Japan, right around the Olympics are about after have reaped the benefits, increasing market share in revenue.

Cue Orr  16:48

And to Tommy's point there, there, there are markets and products that do well like luxury electronics and things like that. But to his last example, there is the chance to come in and influence the market as well. If you're bringing something of quality, something that's exciting, and something that you can translate authentically to the culture, there's a chance for you to grow. So it all depends on the mindset that you have from a brand. If you're trying to just get in and get a quick win and get some quick cash. A lot of times, we'll just see through that, as to the example with some of the luxury brands trying to rush in last minute, maybe not taking the time to understand the market and the nuances of it, and then getting bucked and not making that money. But if you go in with an authentic aspect, or trying to communicate your brand authentically, then you have a chance to win the hearts of consumers and continue to grow.

Aaron Conant  17:54

Yeah, I mean, they just come to like a thought that a lot of times that comes in, hey, are there common mistakes that brands make when launching in China? So one of them, is clearly, hey, you have to be authentic. This can't just be a money play. It's not just going after the amount of econ that's there and hoping to make a couple bucks. It's the authenticity behind it. Are there any other like common mistakes and just a reminder, others have questions drop into the chat or drop into the q&a, or keep emailing them to me, aaron@bwgconnect.com. What are other common mistakes that you see brands make?

Cue Orr  18:29

One of the most common ones that law people will just do Google Translate and slap some characters on an image and think that's translating their brand to Japan. Where there's not an exact translation, there's nuances to the words and nuances to the culture, to the presentation of brands and how they should come across on marketplaces, websites, advertising, and things like that. So that's like the 101 that everybody should understand is that you just can't Google translate or just flip words and expect your brand to be accepted as the most common one that we see. Tommy, are there any ones after that, that you want to kind of get into?

Tommy Vogtman  19:16

Sure. And Cue to add to that, just to reference 99% of the population in Japan speaks only Japanese. So to your point the just directly translation, translating, it's just not going to work, you have to capture the nuance of the Japanese culture. And then other factors, promotion advertising, these are really important factors for the Japanese market. So, it's really about planning, planning research, planning working with the right partners.

Aaron Conant  19:53

Awesome loads. So another question that comes in Rakuten seems to be the largest, are there other marketplaces there and where should brands start?

Tommy Vogtman  20:01

Yes, Rakuten is huge. Just to reference.

Aaron Conant  20:08

Go ahead. No, no. Is this like a whole slide, I love it.

Tommy Vogtman  20:13

So what you see here is the top marketplaces for Japan. And as you can see, it's a huge market. And Japanese consumers are finding products that are not available in Japan, and begin to go to these marketplaces to make their purchases. And these are the top 10 Japanese marketplaces. And you can see it's wrapped by your monthly visitors. The obvious players are, of course, Rakuten, Amazon. Amazon, Japan, and other niche marketplace players. But Rakuten is huge, they're not only Japan's largest online shopping marketplace, they have 111 million registered users. But they are also embedded in the daily lives of 90% of the Japanese population. That's mind-boggling, right? 90% of the Japanese population has some kind of a Rakuten account. And they do business and marketing, data analytics, travel, food delivery, messaging, app banking. And also they are a major telecommunication operator. So it's a big market.

Aaron Conant  21:27

Awesome. But what does it take to get launched on these as usually the question that comes out, right, so if I'm thinking like, hey, I want to go to China, I need to find a teepee and the partner to go to launch there. There's paid media, there's usually a Tmall Global storefront set up, then I know there's a bunch of other channels that people are going, what does that look like for Japan? And then what is the time for, set up an account rolling it out? Do we need distributors there, hey will kind of have some more thoughts around he was to take the launch, I'm thinking of international is a key focus for a lot of brands, which it is right now. They're looking for those growth opportunities that will work. They also want to know like a timeframe, is this a six to nine-month? Is this a one to three month timeframe? And then a couple other questions come in what is total cost for entry? So we can kind of pick that apart as well. But I think so multiple questions in there.

Cue Orr  22:28

Definitely. Everybody wants to know how long does it take to get up and running, that's typically between six to 12 weeks, so a month and a half to three months to get up and running depending on what type of products you have, the SKU count. If you have internal translations, if you have different creative assets that are there ready to go, it just kind of depends on all those factors where your product is that currently, if you have warehouses in the region, where your products being produced, kind of all those factors come into play. So we can understand where we're going to be shipping the product out of or where we need to ship the product to be able to ship cross border. If you're a manufacturer can ship directly to Japan, those kind of factors come into play initially. And then as far as costs, it all depends on if you're starting out with just one marketplace, two marketplaces, three marketplaces within the region of Japan, or if you're taking full advantage of the global trade platform that it offers by not choosing just one region, but multiple regions, and accessing those through the meta trade platform. So that would kind of decrease the startup fee. But there's an initial startup cost somewhere around 10,000, depending on the marketplace, and then there's a fee per marketplace, or region, depending on how many you decide to go with starting at around 3500.

Aaron Conant  24:17

Is there a thought behind one marketplace versus all of them? What does that look like? Should you hit them all at once and then?

Cue Orr  24:28

So that's a good question, a question we get all the time. And one of the questions that kind of Mamenta was founded on, as opposed to just going after one big marketplace, when we started this, we wanted to go out and tap all these lesser-known marketplaces that may not be on Amazon. So when you go out and you attack and you access all these marketplaces and you're available on all these marketplaces, they slowly start to add up to be bigger than one of these accounts on one marketplace and with the Mamenta Trade platform, let you kind of set these up a lot quicker than doing one-off. And aggression is by yourself and to each one of these marketplaces. So we always like the Roy's suggest going with a multiple marketplace approach. But sometimes it would just be staggered and launching, depending on the complexities of the individual marketplace and the complexities of the brand and their infrastructure, and timing and getting everything set up. And in the right distribution centers and things like that. So it may be like staggered, like, get set up, and then launch one, month three, and then the next one the following month, and so on and so forth. Sometimes it's everybody wants to launch at once, and we do kind of like more of like a big bang, where maybe it takes a little bit longer to set up. But we have everything and we launch at the same time. So just kind of dependent on the brand and how they want to roll that out. But we have the capabilities to do both.

Tommy Vogtman  26:13

If I can add to that, you know, protecting the brand is just so crucial. And the end of the day, we're talking to this, we're very well-known brand, whether products or so by multiple third-party sellers in Japan. And this particular brand didn't have any official brand store in Japan. And because that they didn't have insights into their customers, which means they don't have control over product messages, reviews, since third-party sellers control all that. So, for this particular company, protecting the brand across multiple marketplaces, was of utmost importance. So I think brands should be considering establishing a digital presence in global marketplaces, to control product display pages banned messages, regardless of the local sales partner responsible for that fulfillment.

Aaron Conant  27:09

Yeah, I mean, it's unique, the same thing in the US, right? You have like brand, say, I don't want to be on Amazon. A lot of times there's somebody else already selling all your products there that it's just that are you in to control your brand and your brand image. And there's two routes, you either jump in or you go in and you just restrict those people from doing it. So super interesting. What about I don't know, as far as content, I know, we're kind of gone sideways with some of the questions that are coming in. But for those of you who joined keep sending in questions in the chat, the q&a or emailing them to me, aaron@bwgconnect.com. We'll keep getting the answer.

Cue Orr  27:54

Tommy, to your point. Yeah, just also owning your customer and owning the brand, is a main thing with what we're seeing with these marketplaces, or one of the main values not only are you getting sales and getting views. But you're taking back control of your product of your brand. And then also you're getting the data from, you know, from your customers, you're understanding that customer better in that region, as opposed to giving your brand up to somewhere else, if you're doing it through a distributor model, or some a lot of people are just being really opportunistic, and they're seeing a void or a need for your product, somewhere around the world. And they're buying it themselves and putting it on these marketplaces. And then you're at a complete loss of how your brand is being controlled the customer service, things like that. So especially in a marketplace like Japan, where so much is built up around reliability, customer service, quality, things of that nature. If someone's selling your brand there without you, you can be losing out on the lifetime value of a customer could because they might not be getting the true experience of your brand.

Aaron Conant  29:16

Awesome, love it. What about marketing?

Tommy Vogtman  29:22

Sure. Let's talk about marketing. Japanese consumers, like I mentioned, go to review. They heavily review on, rely on reviews them, where do they go for these reviews? They rely on social media, Instagram, of course, YouTube, Twitter, TikTok where they connect with brands and influencers to promote their products through videos and blogs. In Japan, digital advertising is a big market. Japan ranks fifth in the world, where brands heavily invest in search and display ads. It's interesting because ads are everywhere in Japan and Japanese consumers are very receptive to advertising. Actually, search advertising is a $17 billion business in Japan, where a big social media players are like line owned by Softbank as well as Twitter and Facebook. Like in this picture, you see billboards, public transportations. So the good news is Japanese consumers are used to massive information on a daily basis.

Aaron Conant  30:30

Is there a percentage of spend GC in Amazon or, there's Amazon, Japan versus Amazon Rakuten? But this question was specific to Amazon, but even for launch? Is there a percentage of ad spend that you see, based on how much is moving?

Cue Orr  30:48

That's a tough question. It's on I'm definitely on a case-by-case basis. Because there, sometimes there's a product that there's a desire pent up demand for that just hasn't been fulfilled. So you're able to go in and launch your product with not as much advertising for that product, just letting people know you're here. And sometimes, there's so much demand that we're able to make partnerships with the marketplaces, and they'll do a push behind a brand launch and things of that nature, if your brand of certain stature. Other smaller brands, or maybe niche products that are trying to create an awareness, you'll have to spend a little, you have to spend some money, you know, sometimes anywhere between five, 10, 15% of what your desired revenue is. But it's kind of really hard to put just a general number. Because it's all based on what that product is, the demand in the market, what your intentions are as a brand if you're trying to create a market or if you're trying to fill a need. So all those kind of factors go into it, but it's something that we do help you actualize and come to a point where you have a plan to go live with.

Aaron Conant  32:15

I mean, five, 10, 15%, that's pretty in line with what happens here.

Tommy Vogtman  32:21

I can add to that, and then it's the forums too, like, you know, Google, obviously Yahoo Japan is huge they're major players. And by the way, Yahoo Japan is separate entity from Yahoo US. Yahoo, Japan is owned by SoftBank. But also running campaigns, the timing is also important to, understanding the Japanese culture, for example, the Japan's biggest spending holidays, New Year’s, where people buy new clothes home items to start the year fresh. Another key point is April, where many corporations end their fiscal year in March? So April is that started the new fiscal year, school also starts in April. There's also a higher spending pattern during the summer, where Japanese company provides here the summer bonuses where people spend for leisure travels and good. So it's not only the platform, but it's also the timing of running these ads and campaigns.

Aaron Conant  33:23

Yeah, so when you're thinking, like, from a brand standpoint as a whole, how do they gauge the overall potential? But at the end of the day, it's time, its effort, it's money, right? And so, what is the return on investment look like? Like, are you stepping in like advising brands, like, hey, we have enough data on the platform that we can see, hey, this is how long it's going to take to launch. This is the marketplace, start off fees, this is the paid media that you're going to be required, and therefore is going to take you nine months a year to get break even. Hey, people want to think about as a whole, right? Sales revenue potential. That's what it is.

Tommy Vogtman  34:10

Sure, yes. And that's the big question, right? And there's no one answer, because there's many, many factors, the product, of course, timing, logistics, promotion, translation, localization, and to answer that question to size in the revenue potential, it's also on to important to understand the mentality of the Japanese consumer. But as overwhelming as it sounds, it's really not and then this is what we do on a daily basis. So please talk to us and let's explore how we can help with tapping into this exciting Japanese market.

Aaron Conant  34:50

So we have like, a 30 minute conversation. We can kind of kick those like after the call like he step in, maybe it's an hour I don't know, but you're able to do that full valuation and say, hey, this is timing, this is overall potential, this time suspend is going to be, and then the company can take it back and say, "Hey, this is worth it, or this isn't." And you can line that up by category and profit margin. And are you luxury? You're not luxury, or your cosmetics, are you apparel? Are you home goods?

Cue Orr  35:22

Exactly. Yeah, we want brands to be successful entering the market. So we're here to do the analysis and consultation and kind of help figure out where's the best fit for the brands and based on the goals of the brands, they're trying to grow, or they're trying to hit certain revenue, by a certain date, things of that nature. So we try to make the best fit for the brands, and we're expanding them internationally.

Aaron Conant  35:55

Awesome, awesome. Love it. Keep sending in questions, we'll keep getting them answered. On the deck here, I don't know if we've, again, we jumped around a little bit. I don't know if there's additional stuff, it'd be great to.

Cue Orr  36:12

You want to talk about the post left Tommy a little bit.

Tommy Vogtman  36:15

Sure. Yeah, let's talk about this. Because like the rest of the world, the pandemic further pushed Japanese consumers to online shopping, which led to increase in online purchases and reliance on the convenience. Now leaving the home, right. I mean, so that's not unique to Japan. But what's unique to Japan is that it opened up a new group of online shoppers, particularly the elderly people, now with internet connectivity, who were initially reluctant, but now they're very happy online shoppers, who will most likely stay online after the pandemic. So this is pretty important. And from a numbers perspective, Japan's cross-border eCommerce market is growing. It's today a $2 billion market, we're talking cross border, estimated to be over $5 billion in 2030. So this is where new opportunities lies, for US and global companies.

Aaron Conant  37:16

Just still amaze me that more people aren't doing it, I guess, is what sticking at the back of my mind. Are there any, like stumbling blocks? Are there any roadblocks? Are there any governmental barriers that hinder? I mean, I imagine there are some like over-the-counter pharmaceuticals or maybe infant formula, maybe like that, but is there anything that's inhibiting brands today?

Tommy Vogtman  37:42

Not really, that's where research comes in. But from a trade perspective, Japan is very trade-friendly. Obviously, there's going to be stuff that you can't pay cross border, but Japan uses a global HS coding system for importation. Very friendly with the US. US-Japan trade agreement. US-Japan digital trade agreement, various economic partnership agreements, Japan European Union, economic partnership agreements, and the import duties are pretty low. It's five to 10%. Of course, depending on the specific products, I'm just generalizing here, but pretty low import duties and import duty-free, personal goods, going through marketplaces, import duties are duty-free, under 16,666. Yeah, it's very specific, roughly about $160. So it's very trade-friendly.

Cue Orr  38:54

To your question, Aaron, again, I think it's just a lot of people I talked to it's the perceived cultural differences and the perceived, like, hindrances to get into it but not really actually understanding what that may be. So I think that's why these conversations are important to have and if anybody wants to discuss more, we're more than welcome to hop on a call, and kind of get into the details specifically about your brands and your products. But I think it's just the understanding of the market hasn't really been out there. To Tommy's point, it's 99% Japanese speaking only. So are Japanese first language. So for English speakers, it's sometimes it just gets stuck in your head that, hey, this might not be an easy or easy market to go into. But we do have like translation specialists that know the nuances of the language to help translate the product details and get that messaging on point. So you're successful during your launches.

Tommy Vogtman  40:08

And Cue, I really want to reiterate that, I really want to stress that because in the past, Japan may have been overlooked by some brands thinking it was a difficult market to enter, but it's really not. And with a population of 125,000,000, 90% internet penetration rate, cross-border has tremendous growth opportunity. And Japan is actually a very enticing market for online sellers

Aaron Conant  40:35

Awesome, so another question comes in what is it good split between online marketplace marketing spend in off marketplace? So search PR at 80/20 50/50. So I think all digital, we're not talking in-store versus online, like a transplant or something like that, I'll interrupt her and cast or something, but I think specifically spending on Amazon or Rakuten versus sending on Pinterest and other social media platforms, what do you see is there?

Cue Orr  41:13

With any marketing plan, any rollout, it all depends on where your customer lives. So just like in the US, Japan has different platforms, different social medias for different markets. So here in the US, if you're advertising to older age group, senior citizens, you're not going to be on Tik Tok. You're not going to be advertising there. You may be advertising on Facebook and Google things of that nature. But if you're trying to advertise to younger people, you'll be on TikTok. Same goes for Japan and any of these marketplaces around the world. We try to be specific to the brand and the brand's consumers and where they want to see advertising or where they want to be communicated to, and also just not where they want to be communicated to where they're receptive to being communicated to. So I wish I could give you like a specific answer on that of the split. But it kind of all depends on what product it is what the messages we're trying to get out. Power trying to grow, is it a pure play just for sales is brand growth, is it overall brand growth, and then you're going down and to product specific things. These are kind of like the nuances that we'd love to get into. So we can give you the right answers and roll and roll launch out perfectly. But it just kind of takes a little bit of research and understanding brands and understanding all the goals at the end of the day.

Aaron Conant  42:52

Awesome. So another question that comes in here. Can you share an overview of the distribution model here in terms of logistics and importation process? So we talked a little about, I think, at the beginning, like you guys have a ton of partnerships a distributors or warehouses, do you buy the merch from the brand and act as the importer of record TP distributor model? Or does the brand ship direct from the US? Or do they have warehouses that can ship directly in there closer?

Cue Orr  43:26

Yeah, there's a couple of different options that you can go with. One is shipping directly from your manufacturer, if they're set up for that. We've seen that not many are there's small percentage that can do that. And when they can do that, that's actually great, because you're not shipping it to somewhere else. And then shipping it again, cutting costs. So that's actually a great way to do it.

Aaron Conant  43:52

So really quick, but you're not buying inventory, you're not buying wholesale and reselling?

Cue Orr  44:00

Correct, Mamenta, we're not buying product wholesale and then redistributing it. Some other companies do that, which is fine. But a lot of times for the brand you lose, once you sell the product, you lose control of that. So we like to help brands control their customers, control their product, control the whole experience. So we function primarily as the types and the conduit for the brands to take it out to the marketplaces. We have done partnerships where we have brought in other third parties to buy the stock and worked collectively. So there's always the opportunity for that. But primarily we work directly with the brands to the marketplaces. But we're not against bringing in people to buy the stock. It's just something that as Mamenta itself does not do. So we're talking about distribution that we're getting into Japan. So option one is shipping directly from the manufacturer. Option two would be if you're a US-based company, wherever you're getting manufactured from gets shipped to the US, we can ship it directly from your warehouse in the US if you're set up for eCommerce, or we can put it into our distribution network and the US and ship cross border, there's hubs in Hong Kong that we can get set up for you and have your product shipped there. If you want to section off a product specifically for Japan, a lot of brands do, we worked with before, they have maybe set up shop in Hong Kong, but setting up Hong Kong to go cross border into multiple different marketplaces in the region, whether that's Southeast Asia on Lazada, to Coupang in Korea, and then also into Japan as well. So creating a regional hub. So you're having product, not just specifically for one marketplace or one country, you're opening it up and giving that access, so you're able to distribute it all over the place. Or, like I said, you can just ship out of the US. So you're earmarking, a specific part of your inventory just for the region. So you can kind of start out testing what the demand is based on shipping from there. But also, shipping is going to be a little bit higher, is it going to be a little bit more barrier for shipping out of the US and if you're moving product closer, and all depends on what the product is size of it and all that stuff. But we try to lead you into the best solution that's going to make the most sense to get started and then grow your business and either that specific marketplace, country or region?

Aaron Conant  47:08

Yeah, it's super interesting. Because do you see people then leveraging, like a single point like Japan, and then land and expand to other parts of Southeast Asia sounds like that's kind of what I was pulling out as well as can't think about this as, hey, we want to just break into Japan, when you're setting up a holistic strategy, find what's going to work for the entire region, because once you've got up and rolling in one of these turned on, it's a lot easier once you have the pipe set up, but also the contacts, the distribution, the inventory there to start flipping on other marketplaces where you see that rapid expansion.

Cue Orr  47:47

That's the one of the main benefits of momentum is like once, and it goes back to when we're talking about pricing and fees. If you're just focusing on one marketplace, you'll get the benefit. But where you really start seeing the benefit is you've already set up that one marketplace. And now from there, you already have everything and then the Mamenta Trade Platform. Then we're just setting up the infrastructure and administrative stuff for the new marketplace, the next marketplace that you want to go to. And then those marketplaces in that region are easily turned on and you can expand at a faster pace once that initial setup is done.

Aaron Conant  48:32

Awesome. Love it. I mean, I think that's it, because then you can get a single point of view on inventory, control pricing, promotions, content, everything from a single hub, but also then just start flipping on additional marketplaces. Great, as we're getting kind of the end here any like key takeaways, things that we didn't get to that you thought we might get to? I mean, we cruise through a lot of stuff. Yeah, I mean, a global clients.

Cue Orr  49:02

Yeah, just some of the clients that we work with. And just couple quick case studies. Harman International is one of our bigger clients. And one of the main clients that's utilizing the platform internationally, during grading Japan, and also in the US. But basically, they had one of the common problems the way they grew their business internationally through different distributors, different warehouses, they had just a really disparate infrastructure with different product everywhere. What we were able to do is tie that infrastructure together through the Mamenta Trade Platform, and then take all that information is distributed on to global marketplaces, and help them increase sales because they're able to realize where certain inventory was shift its way around. Make different inventory available through cross border based on having that in the system. So that was just one of the success stories. And we've also worked with Gerber that had similar issues to launch in Japan. So just kind of wanted to get into those. And just kind of stuff that we've kind of been talking about Mamenta. And know what makes the difference with us. We have coverage all over the world, 20 60 marketplaces 75 pre-connected Threepio warehouses in 70 different countries. We have a unique operating partner ecosystem and support network, and localization. So we work with a bunch of different operating partners on the global and local level, to help carry out the vision of the brands, depending on their specific needs. Are very engaged managed service offering at Mamenta. So once you're on board with us, we're really, really hands-on. And really, we just want to see the success of the brands. And we just do deep dives into the countries and we want to make sense of it for all for you guys. And we're really, really consultative on how we prescribe things and identifying the marketplaces for you. And our code base was developed specifically for a global marketplace integration. That's what we started out with. And so we kind of worked back to the US from international view, to like the US marketplace like Amazon, and Walmart, and things of that nature. And yeah, I think those are kind of like the key points that we just kind of wanted to get across about who we are and what we can do for you.

Aaron Conant  51:53

Yeah. Awesome. Tommy, any key takeaways here?

Tommy Vogtman  51:57

Yes, I just want to say Japan is a prime eCommerce market to everyone, very savvy consumer base who has considerable amount of disposable income. And then, it's unique. But if you do the right planning with the right partners who can navigate the Japanese market, it's a very, very exciting market to enter. And then what we do is help brands focus on what they do best, which is to sell products, and we can help you. So it's I guess, I just want to say, Japan is a very enticing market for all of us.

Aaron Conant  52:33

Awesome. Well, Cue and Tommy, thanks so much for your time today. Thanks to everybody who dialed in all the great questions. Look for follow-up email from us. I'd love to have a conversation with you on your pain points, get topics for future calls, also encourage anybody set up a follow-up conversation with the team here at Mamenta. They're leaders in this space come highly recommended from a ton of brands, the network, if you're looking to launch internationally, not just in Japan, but literally in any marketplace globally. Though this was Japan-focused, but it's literally any international marketplace. Set up time with them, pick their brains, they can help design the plan as well as execute on the back end. And with that, we're going to wrap it up. I hope everybody has a fantastic Thursday, everybody take care stay safe. Look forward to having you at a future event. Thanks again Cue.

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