Market entry
Options to consider when entering the cut flower market in Japan include:
A pre-entry study of market desirability.
Supply through an experienced consolidator or export agent, or work with flower associations that are familiar with Japanese quality standards and other requirements.
Participation in major tradeshows such as the International Flower Expo (IFEX) in order to meet potential customers.
Find relevant importers/wholesalers who have unique sales channels and strategies that are ideal for your products.
Distribution channels
The major wholesale distribution routes of cut flowers in Japan are as follows:
The auction system
A large percentage of cut flowers are still sold through the traditional auction system. With this system, importers receive flowers, clear customs, and send flowers to auction houses on a consignment basis. Based on their own analysis and experience, importers decide which market to send flowers to that would attract the highest price. The final amount returning to the suppliers in India is fixed after the auction. Auction houses take a 10 per cent commission, which is designated by wholesale market law in Japan. Only registered buyers can buy flowers directly through the auction system. Small retailers, flower designers, and other buyers tend to buy through ‘intermediate wholesalers’ who have shops within the auction houses.The auction system was developed because of the difficulty in standardising quality with agricultural produce. The downsides of the auction system are:
Suppliers do not know the exact sales price until the auction is finished.
Market demand also influences the price. The delivery of high quality products does not always guarantee a good return to the supplier.
Buyers can't always get what they want.
Pre-ordering and pre-auction sales
These systems were not actively used until the revision on the wholesale market law was announced. When pre-ordering the importer takes orders from the auction house or their own customers before shipment and in pre-auction sales, after shipment but before auction (pre-auction) and sell to them at fixed prices that are usually higher than auction prices. This system gives an improved return, but suppliers have to make a commitment to satisfy required standards set by the auction house or importer.
Direct sales to large retailers
Some large retail customers such as supermarkets buy flowers directly from suppliers or through importers. Although you can avoid the auction house commission using this system, opportunity is often limited to certain varieties that are reasonably priced and ideal for volume retailers.
Sales to importer’s customer
Some importers are actively developing their customer base and selling direct. This includes home delivery sales and correspondence sales operated by the importer or their related companies. This way of distribution is still only small in today’s market compared to the traditional ways of distribution.