Japan Is an Enticing Marketplace for Cross-border Ecommerce

Japan is the world’s third-largest ecommerce market after China and the USA.

However, it is often overlooked by foreign online merchants because of an unusually low cross-border purchase rate and a somewhat neater approach to online shopping.

Only 10 percent of Japanese consumers buy goods on foreign websites. But with a population of 126.5 million, a 93-percent online penetration rate, and 75 percent of those making purchases online, Japan is an enticing market for Malaysian online vendors.

Research firm Statista anticipates that Japanese ecommerce sales in 2020 will amount to approximately $100 billion, a diminished estimate due to global economic changes. An unpopular sales tax expansion in 2019 is also dampening consumer spending.

After a contraction in the last quarter of 2019, the Japanese economy continued to shrink in the first quarter of 2020. Japanese clients, once considered tremendously brand-loyal, are now more cost-conscious and showing an increasing willingness to try new brands in their pursuit for deals.

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Japanese Internet Consumers

  • Most Japanese do not read English or other foreign languages and buy only from Japanese language sites.
  • Japanese clients want detailed info about the product they’re thinking of.
  • Japanese clients are avid mobile users. More than half of online purchases are on a mobile device.
  • While credit cards are the payment system for several internet sales, the Konbini currency convenience-store-payment system is also popular, with 50,000 places around the nation. Locally-issued credit cards are a whole lot more popular than Western-brand cards.
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Japan is home to a rapidly aging population, but seniors use the internet at a level similar to younger people. Japan is losing people due to a very low fertility rate, so targeting the older population — which includes 28 percent of the entire population — makes sense.

Sales opportunities exist for those merchants who can address the needs of elderly customers. For instance, prepared foods are a $20 million and fast growing market with growth attributable primarily to seniors, according to Statista. The Covid-19 pandemic has caused a spurt in online sales by this vulnerable section.

Marketplaces

Three market platforms — Rakuten, Amazon, and Yahoo Shopping — account for over one-fifth of online transactions in Japan. Rakuten and Yahoo Shopping require non-American foreign companies that wish to create accounts to start a local business or employment with a local intermediary on their behalf.

Rakuten. Japan’s biggest marketplace in earnings has over 100 million members and is strongest in food and style. American brands that market on Rakuten’s platform have their own storefront and product listings. They are also able to promote via sponsored product listings and leverage other advertising features on Rakuten, like vouchers, newsletter ads, and banner ads. Rakuten has its fulfillment service called Rakuten Super Logistics.

Amazon Japan ranks first in site visits and earnings . It offers a relatively simple way for overseas merchants with an Amazon vendor’s account to market products directly to Japanese clients. Amazon requires that all sellers provide customer care in Japanese. Amazon handles fulfillment from Japan, but companies must get a Japanese company as an importer of record to look after customs.

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Yahoo Japan Shopping is the ecommerce arm of the diversified web portal of Yahoo Japan, which will be owned by Softbank and Alibaba and is different from its American parent. Yahoo Japan Shopping provides a wide range of products, including cosmetics, electronics, apparel and footwear, home equipment, and furniture.

Zozotown is an offshoot of a mail-order company, Start Today. It’s the largest specialized fashion and apparel ecommerce platform and supplies goods from many local and international brands. Yahoo Japan acquired a majority stake in Zozotown in 2019.

Qoo10. This online marketplace has a large portfolio of products in fashion, beauty, sports, digital, mobile, home living, lifestyle, food, baby, entertainment, and novels, Operated as a joint venture with eBay, Qoo10 also sells in other Asian markets and is very powerful in Korea and Singapore.

Wowma was set by KDDI, one of Japan’s largest mobile phone suppliers. The site offers over 20 million products, such as cosmetics, decorations, clothing, electronics, and health care services.

C2C marketplaces. Japan has a booming consumer-to-consumer market that has expanded in the last couple of years. It’s composed of secondhand marketplaces and online auction sites. The two major players are Mercari, which works via a downloadable application, and Yahoo Auctions. Rakuma is a C2C flea market application owned by Rakuten.

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