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A Look at the B2C & B2B Ecommerce Landscape in Japan
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Japan has the 4th largest ecommerce market in the world, behind China, the US, and the UK. It has continued to grow every year, with demand only growing since the start of the pandemic. With more people buying and selling online, ecommerce is a great way to reach Japanese customers. 93% of Japanese people have internet access, and 75% of the Japanese population are making purchases online1.
Both the B2C and B2B markets are an important part of the Japanese economy. In 2019, B2C ecommerce alone was worth $178 million.
This article explores both the B2C and B2B ecommerce markets in Japan: top industries, current trends, and future outlooks. Keep reading to get a closer look at B2C and B2B ecommerce in Japan.
Let’s first review the definition of B2C ecommerce before exploring the landscape in Japan.
B2C ecommerce refers to any ecommerce done between a business, store, or brand and a consumer. Some examples of these are Rakuten, Amazon, or Etsy.
In Japan, although Amazon is still immensely popular, there are other large platforms as well. One of these is the aforementioned Rakuten. Some reasons for its popularity are the sheer number of merchants, as well as the fact that it allows merchants to create their own digital storefronts and customise their design more than Amazon.
Other popular marketplaces are Yahoo! Shopping and PayPay Mall, which is part of the Yahoo! Shopping network. PayPay Mall is relatively new and has a popular cashback rewards system.
If you are interested in selling on PayPay Mall, we at DMFA can assist you through our exclusive three-way agreement with a Japanese ecommerce agency. We can help sell your products on the marketplace, as well as provide fulfilment, logistics, and customer support. Contact us to learn more about this solution.
For more on the most popular ecommerce marketplaces in Japan, check out our blog.
In 2021, the Ministry of Economy, Trade and Industry (METI) published a market research report on the 2020 ecommerce market in Japan. The report found that in response to COVID-19, the market growth of tangible products increased significantly due to national lockdowns. However, the overall size of the B2C market shrank due to a significant decrease in the service industry, particularly travel. This was the first time since METI started conducting these market surveys that the B2C market scale had not seen an increase.
The report also found that the top four categories of consumer electronics (worth 2.3489 trillion yen), clothing (2.2203 trillion yen), food and beverage (2.2086 trillion yen), and household goods (2.1322 trillion yen) together account for 73% of the total B2C e-commerce market.
Industries with the highest share of ecommerce sales — the percentage of ecommerce sales compared to all commercial sales — were books & video/music software (42.97%), consumer electronics (37.45%), and household goods (26.03%).
Due to the pandemic, the market size of sectors such as travel, food and beverage services, and ticket sales shrunk significantly.
Worth almost 1,500 billion yen, online games accounted for a large proportion of the ecommerce digital field. As consumers spent more time at home, online gaming, video streaming, and music streaming industries grew2.
Although the B2C ecommerce market is growing at a remarkable rate in various fields, the share of ecommerce sales was only 6.76%3. When comparing against other large markets like the US, where the share is expected to reach 13.6% by the end of 2021, Japan’s rate of adoption is still quite low. This indicates that there is room for growth within B2C ecommerce.
B2B ecommerce refers to transactions made between businesses to other businesses. This can be between a manufacturer and wholesaler, or a wholesaler and a retailer, through an online sales portal. B2B transactions tend to happen in the supply chain, where one company will purchase raw materials from another to be used in the manufacturing process.
By conducting sales online, businesses can process orders more quickly than by telephone, fax, or e-mail. In addition, driving website traffic through search results and digital ads, can help companies increase sales and acquire new customers both domestically and internationally. B2B ecommerce is also beneficial as it reduces the workload of receiving and processing orders and responding to inquiries.
B2B ecommerce can also prevent erroneous orders and shipments due to human error. Also, if clients are able to check product information online, this reduces the number of inquiries by phone or email, thus further decreasing the overall workload.
Let’s explore some real-life examples of Japanese B2B ecommerce companies.
Monotaro mainly sells materials and tools to businesses in the manufacturing and construction industries and is known as the “Amazon of factories” in Japan. In the past, purchasing such materials required time-consuming catalog orders and negotiations with distributors.
Monotaro streamlined the distribution process and has made it easier to purchase products through e-commerce sites. It is also popular because companies can order as little as one item with same-day shipping and next-day delivery.
ASKUL is another Japanese B2B ecommerce company. It sells office supplies to businesses online. In the past, small and medium-sized businesses had to go directly to stores to purchase office supplies, but ASKUL has eliminated this extra step.
In 2019, the size of the BtoB ecommerce market was 352,962 billion yen, an increase of approximately 65 trillion yen from 2015, when the market size was 287,225 billion yen. There was a slight dip in 2020 when the market size fell to 334.9 trillion yen. However, the share of ecommerce sales (the percentage of ecommerce sales compared to all commercial sales) was 33.5% in 2020, up 1.8 points from the previous year4.
One of the reasons behind the growth of the B2B ecommerce market over the past 5 years is the growing momentum for digital transformation and operational efficiency. B2B ecommerce has been proven to improve efficiency and sales, which is why so many businesses have embraced it.
The manufacturing and wholesale industries had the highest share of ecommerce sales in 2020. Conversely, the construction, service, transportation, and information and communication industries had low shares of ecommerce sales5.
The top industries that increased in size in 2020 from 2019 were retail, construction and real estate, other services, and information and communication. In terms of share of ecommerce sales, the top industries were transportation machinery (70.7%), food products (63.3%), and electrical and information-related equipment (61.1%)6.
Although the growth of both BtoC and BtoB ecommerce shrank due to the pandemic, the sales share for both have increased. The market for B2B ecommerce is about 20 times larger than that of B2C, and is expected to grow even more in the future.
It is clear that the market size of both B2C and B2B ecommerce is trending upward in Japan. As sales increase and more people choose to buy online rather than offline, there will be more opportunities for foreign businesses as well.
The best way to enter the Japanese market will also change as the landscape continues to evolve. Our team of bilingual account managers are happy to support you in any of your online marketing needs. As mentioned above, we can also help market your products on PayPay Mall, one of Japan’s top ecommerce marketplaces. Contact us to learn more about this or our other digital marketing services.
1Source: https://www.practicalecommerce.com/japan-is-a-enticing-market-for-cross-border-ecommerce
2Source: https://www.meti.go.jp/press/2021/07/20210730010/20210730010.html
3Source: https://www.makeshop.jp/main/know-how/knowledge/ec-market.html
4Source: https://bcart.jp/post/detail/131/
5Source: https://paid.jp/v/contents/pre/useful/btob_ec.jsp
6Source: https://bcart.jp/post/detail/131/
