This $20 Million Bean Bag Company Is a Hit in Japan–and It’s Betting on Becoming a Global Success
Eyal Levy thought Yogibo would be big in Japan. How could he best expand the brand?
PHOTO CREDIT: Getty Images
By 2013, Eyal Levy had spent four years building Nashua, New Hampshire-based Yogibo into a successful fun-and-friendly lifestyle brand centered on its body-hugging beanbag chairs. The Japanese market tempted him. How could he expand there?
"You want a simple model when things are unfamiliar," says Levy. Franchising stores would provide the experience Yogibo was known for. But Levy was daunted by the prospect of complying with local franchise laws and monitoring distant operations. The key was finding a local distributor he trusted. To deter all but the most committed, Levy lowered sales estimates and emphasized challenges. After finding a good candidate, Levy spent months getting to know him.
The chosen distributor was the owner of an e-commerce business--but Levy knew online alone wouldn't cut it. He'd tried that route when Yogibo launched, and soon learned that his product's appeal was tactile. Customers fell for the chairs by scrooching into them. They also needed a demonstration to understand the product. E-commerce provided neither.
Levy succeeded in the U.S. with a model combining brick-and-mortar outlets, e-commerce, sales at events and festivals, and--chiefly for accessories--wholesale. "There's a perfect synergy among all these channels," says Levy, who insisted on pursuing all four in Japan.
The aspiring partner agreed. Levy quickly accepted several changes desired by that distributor: adding gift-wrap services and creating a busier website, both ubiquitous in Japan. The distributor also pushed for pop-up stores. At first, "I did not buy it," says Levy, fearing he'd downscale the brand. But then he visited Japanese malls and saw pop-ups from the blue-chip likes of Lego and Nike.
Another concern: Pop-ups are smaller than stores and don't carry inventory, so customers can't walk out with beanbags. But Levy learned that Japanese customers prefer to have their products shipped. Also, Levy realized, with regular stores "the staff has to wait until customers walk inside to approach them," he says. "With a pop-up, you can smile, and kind of pull them in."
Today, Japanese sales account for 15 percent of Yogibo's revenue--which should top $20 million this year--with minimal strain. Levy has duplicated the strategy in Canada, Kuwait, and South Korea: the same rigorous recruitment, the same contracts, the same slightly relaxed attitude toward consistency. "Learning the specifics of every market is not feasible for a company our size," he says. "Finding the right person who will take our whole model and localize it is the key."
What the experts say
"I'm not surprised Levy spent months getting to know his distributor. Not only is this a good practice when making that decision; it's the only way to establish trust and a long-lasting relationship in Japan."
--Ben Wright, CEO of Velocity Global, a Denver-based international employment services firm
"I like how Eyal zeroed in on the fact that what closes the sale is touching the Yogibo. I hope he's making sure he can get out of his distribution agreements if he's not happy. I learned the hard way to always have outs in contracts.
"Has he tested infomercials? Sometimes infomercials can replace the need for a tactile experience--they're a great way to expand internationally as long as distributors can get the right margins."
--Alberto Perlman, co-founder and CEO of Zumba Fitness
"I'm astonished by Levy's ambition. Going international at this early stage is daring, given Levy has to do all the heavy lifting.
"He is right to allow strategy modifications. Not adapting to local conditions is the most important reason many international expansions fail."
--Jan-Benedict Steenkamp, author of Global Brand Strategy: World-Wise Marketing in the Age of Branding