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Business

Amazon, Nippon Express to help Japan's small businesses sell to US

Service promises to slash distribution costs via consolidation

Nippon Express, along with Amazon, will store and deliver products from small Japanese businesses to the U.S.

TOKYO -- Nippon Express and Amazon.com are launching a logistics service that lets small and midsize businesses export products to the U.S. for as little as a third of the current cost, catering to a segment of corporate Japan that tends to be wary of overseas expansion.

Tokyo-based Nippon Express will serve as the liaison for interested companies. If Amazon gives the green light, the applicant will pay shipping and other costs.

Small, nonperishable items like eating utensils and stationery are likely to be the first to benefit from the service. Products from multiple businesses will be consolidated at Nippon Express warehouses in Japan, then shipped and sent through customs together.

After arriving in America, items will be stored at facilities run by Nippon Express or Amazon, and sellers will market them through Amazon. Having stock in the U.S. will reportedly enable orders to reach customers in a matter of days, instead of the more than a week it normally takes to ship from Japan. That should help make the products more competitive.

The service is expected to be the first step in an initiative spearheaded by the Ministry of Economy, Trade and Industry to speed domestic companies' moves into overseas markets. The range of eligible products and businesses will eventually grow to cover apparel, furniture and food.

If all goes well, the service will be expanded into other Asian markets and Europe. The ministry will encourage other couriers, department store operators and trading houses to set up companies to support the initiative. It is considering providing assistance via a government-backed fund as well.

Small and midsize companies that export goods on their own must bear the distribution costs. Many deal with middlemen such as export and import agents and retailers, which adds to the expense. For a product that sells for $100, the original seller keeps just $20 to $25, with the rest eaten up by such expenses as fees paid to distributors, according to the trade ministry. Nippon Express and Amazon say the new service should boost this figure to between $65 and $75.

Small businesses also tend to lack the personnel and know-how to handle complex export paperwork, which is one reason why many choose not to bother. 

But unlike many distributors, Nippon Express and Amazon will not buy the products themselves, leaving the risk of unsold goods on the seller. Companies will be able to sell through Amazon for a year, and any items remaining in U.S. warehouses after that time will as a rule be discarded by Nippon Express or Amazon. Sellers will need to pay additional fees to extend the sales period or have items returned to Japan.

(Nikkei)

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