The direct selling industry in Japan has had a mixed reputation over the years, but companies like Amway have put a lot of effort into enhancing their image and becoming a better partner for both their distributors and consumers.
Headquartered in Michigan, Amway, which operates in 58 countries, has had a presence in the Japanese market since 1979. Today, Amway has more than 700,000 distributors in Japan and sells more than 200 products, with an emphasis on vitamins, food supplements, beauty and skincare, cookware, home cleaning products, and most recently, energy drinks.
Overseeing Amway’s operations in Japan is John Parker, who has been here for the past four years. Japan Today visits him at the Amway building in Shibuya Ward to hear more about the business in Japan.
How did the earthquake and tsunami affect your business?
In terms of our people, it had a major impact. We have a lot of distributors in Tohoku, so we made a big effort within our Amway family to get up there and support them. Unfortunately, we did lose some distributors. Our CEO came here in March a couple of weeks after the earthquake and he came back again in May and went up to Tohoku to show our support. Globally, we raised about $4.4 million for earthquake relief, which we donated to different NGOs.
In terms of sales, the earthquake had a minor impact. Sales in March dipped a bit but sales in April were up over sales in April of last year. Our business has proven to be very resilient. That is really a testament to the hard work of Amway distributors.
What are your main products?
We sell over 200 products in Japan. Our largest category is nutrition – vitamins, food supplements. Beauty is our 2nd largest category; we have a very large skin care business. We also sell a number of other consumer products ranging from home cleaning products, to personal care, such as shampoo, anti-bacterial soap, as well as cookware and water air treatment systems.
We have the largest share of the vitamin and food supplement category globally. One of our best sellers is Nutrilite, an all-natural organic brand. We own organic farms around the world where we grow the plants, fruit and vegetables that we use to make our vitamins and food supplements. It’s not a synthetic product. And given the current situation in Japan, there is a demand for that type of health product. We also have a cooking business that is very much focused on healthy cooking using organic ingredients.
How big a market is Japan for Amway?
Japan is our No. 2 market for Amway. China is No. 1, with $3.5 billion. Japan does about $1 billion. The U.S. is 3rd and Korea 4th.
Have any products been developed specifically for Japan?
Yes. One is our best-selling product is a multi-vitamin, multi-mineral called Triple X. We also sell a unique product not sold anywhere else—a bath water treatment system. that purifies water to be used in your shower and bath. Most recently, we have introduced a number of energy drinks that are more targeted toward the younger generation.
Although our R&D facilities are primarily focused in the U.S., we see Japan as a lead market for a number of categories, mainly nutrition, beauty and skin care. We tend to develop a lot of products for Japan first, knowing that if they are successful here, they’ll succeed in other parts of Asia.
Is it difficult to get products approved for Japan?
Every market has its own regulatory requirements and Japan has very high standards. It does take longer to get a product to market, but we are comfortable with that. We like to operate in a well-regulated environment. That’s good for consumers.
What is Amway’s image in Japan?
You would probably find people who either don’t know us or have a vague understanding of us, and then I think you would come across people who perhaps are distributors or customers and hopefully have had a good experience with us. We have a growing presence in social media such as Facebook and Twitter. The majority of our orders come online or through cell phones. We’ve actually had a strong online and mobile presence for a number of years.
Tell us about your distributors.
Currently, we have more than 700,000 distributors. About 80% of those are what we call consuming-type distributors, while the other 20% are people who are really focused on building their own independent Amway business. We have a broad demographic set with a recent trend toward a lot of younger ones in their 20s and 30s. We are predominantly a female business.
How does one become a distributor?
Most likely, you would be friends with or come across a distributor who would introduce you to our products. You probably would have been a consumer of our products for some time. That distributor would sponsor you and sign you up as a distributor. The signup fee is 3,500 yen, refundable if you resign. The company would provide you with support, training and education. Then over time, you may grow your own customer base and network.
How do distributors get paid?
You get paid by the company and receive bonuses directly from Amway. It is a commission and bonus structure based on sales volumes. In addition, we provide incentives, such as trips that you can qualify to go on, based on the sales volume you create and the size of your business. In the past year, we’ve taken groups to Paris, Vietnam and Miami. The amazing part is the income potential is up to the individual. We have a lot of full-time distributors who have built up their own independent businesses, and are earning significant incomes.
One thing that is common to all of them is the social aspect of our business. They are a group of people with common interests and a social side. Our distributors are very focused on telling stories about the products and our brands.
How have you addressed the negative image that the direct selling industry has had in the past?
I think that Amway and more broadly the direct selling industry in Japan does not have the reputation that it has in other parts of the world. We certainly have the responsibility to improve the image. Companies in the industry that cause problems for consumers make the whole industry look bad. This was a problem for us in Japan in the 1990s but over the past decade, we have invested heavily in distributor training, and worked hard to strengthen our rules of conduct and code of ethics to create a higher standard for distributors.
We work very hard to provide distributors with the training they need to be effective and create great customer experiences. As a part of that process, we have developed a rather sophisticated early warning system that helps us identify where problems may develop before they actually occur. That allows us to be much more proactive in the way in which we deal with these situations. We encourage consumers to share positive or negative experiences with us because we do not allow anyone to violate our rules of conduct, but I am happy to say that the overwhelming majority of distributors do a great job.
How often do you meet distributors?
I travel around Japan a fair bit to meet them, and at other times, some of them come here. I like meeting distributors at all levels, whether they are at the top or new young distributors as well. I’m pretty active on Facebook and Twitter and much of the content is specific to our business to foster a sense of community.
What are the Amway Plazas?
Our plazas are part retail store, part training center and part brand experience. We have 8 plazas around Japan. They provide an opportunity for distributors and consumers to come in and find out what we are all about and see us in person. Our goal is not to sell through retail but we do want to have a retail type of presence in order to support distributors. We are going to invest more in this in the future.
How many staff do you have?
About 500. We have plazas and distributions centers as well. We get a lot of applications each year. We try to promote from within but when we need to hire from outside, we go to people we know or we use recruiting agencies.
What CSR (corporate social responsibility) activities is Amway involved in?
Our CSR efforts are focused in two areas – the environment and children. Amway has a strong history on the environment. Our first product was the world’s first biodegradable concentrated cleaning product called LOC (liquid organic cleaner). We were awarded the United Nations Environmental Achievement Program Award years back and we support a number of projects in Japan, including the Afan forest project. We also try to create events and opportunities for our distributors to engage in activities, for example, beach cleanups because we can bring a lot of people to efforts like that.
With children, globally we have a program called One by One that is about helping children in need. We partner with different NGOs. In Japan, we are engaged in the Orange Ribbon campaign to create awareness of child abuse, and the need for foster homes in Japan.
How would you describe your management style?
I tend to be more hands on in sales and marketing. Since we are all about empowering individuals to succeed in a business of their own, providing support and the right environment is fundamental to my management style.
The following questions were submitted by Inter FM radio personality Kamasami Kong.
What are some new Amway products that consumers may not be aware of yet?
We have just launched an energy drink called XS Energy. This is really a unique product. It is a more natural energy drink than anything else on the market. It has no sugar and zero calories and has a great taste. It has a lot of B vitamins and a little bit of caffeine. The key is that it is positive energy. It creates a more consistent energy boost so you don’t have a sugar crash.
What is your most popular product?
Our best-selling product is Triple X, a multi-vitamin and multi-mineral organic product that comes from our organic farms. It is basically concentrated plants, fruits and vegetables in a tablet.
If I look at the product list on your website and see something I like, how do I contact an Amway distributor?
You can contact us and we’ll put you in touch with a distributor.
Are you open to selling almost anything?
We are very focused in health and beauty categories, as well as cooking. We are always exploring opportunities that fit the needs of our consumers and distributors in Japan.
We have done some very interesting programs. We have one with Softbank where our distributors are able to purchase and sell iPhones and iPads. Given the power of Amway distributors and our channel, we have an opportunity to reach a lot of consumers. That’s attractive to a lot of other companies for partnerships.
Does Amway advertise?
We do a little bit. If you look at Amway around the world, we are a significant advertiser in some markets.
What qualities does one need to become an Amway distributor?
The greatest thing about the Amway business model is that it is open to everyone. It’s low cost and low risk. In terms of succeeding, it comes down to persistence and embracing the opportunity and sharing it with others. Amway is not a get-rich-over-night scheme. It is an opportunity for individuals to express their entrepreneurial spirit and have a small business of their own and can achieve for them small goals or big goals.
Any closing message?
We’re very optimistic about the future of Japan and we think we can be a part of that by creating opportunities for individuals. Most people probably know an Amway distributor whether they are aware of it or not.