Japan has the 4th largest ecommerce market in the world, behind China, the US, and…
As of this year, Japan’s ecommerce market is set to be worth $150.1 billion (£105.7 billion), with a compound annual growth rate of 6.2 per cent, according to a 2020 report by JP Morgan. Since the COVID-19 pandemic began in 2020, demand for ecommerce both in Japan and the rest of the world has surged as people favour online shopping to purchasing items in real life (IRL). And according to GlobalData, 2020 growth predictions for ecommerce in Japan increased from 7.2% to 10.1%, estimated to reach $197.1 billion USD. In this article, we will examine this increase and the behaviour that fuels it, as well as highlight how Japanese businesses are working to meet the demand.
How Consumer behaviour has affected buying in Japan
In some areas, Japanese consumers are traditionally slow at adopting new behaviours, mainly due to their aging population. This, however, has changed dramatically over the past few years. With the majority of people working from home, traditional Japanese companies have been forced through digital transformation. Although Japan hasn’t seen strict lockdowns when compared to Europe or North America, the multiple states of emergency and the promotion of 「お家時間」or “staying at home” has had people adopting online shopping at an unprecedented rate. As a result, more people are switching to digital platforms, media, and apps, ordering food delivery and everyday items online.
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Opportunities for overseas retailers
Japanese online shoppers are becoming more open to making online purchases from international sellers. As you can see below, the number of online shoppers making cross-border purchases is growing.
The growth of overseas sellers is evident in Shopify’s sales figures from the Black Friday-Cyber Monday sales event in 2020, where they saw the highest growth at 350% for the Japanese market. Furthermore, Shopify mentioned that Japanese consumers spent the most on average, at 11,090 JPY ($106 USD) per purchase. Similarly, ecommerce giant Amazon saw a massive sales growth of 27.7% in Japan in 2020. If you are reading this article to assist your ecommerce business in Japan, the following articles will also help:
- How to enter the Japanese market during the COVID-19 pandemic
- A guide to the most popular ecommerce marketplaces in Japan
- How to start selling your consumer product in Japan through ecommerce
How businesses are competing to supply this demand
With any business opportunity, there will always be retailers that are successful in garnering consumers’ attention. It comes as no surprise to anyone that Amazon has successfully expanded to the Japanese market, competing against domestic enterprises for the position as the leading ecommerce site in Japan.
However, the success of larger ecommerce businesses like Amazon and Rakuten is not exclusive. In mobile commerce transactions, businesses are releasing sophisticated new products in an attempt to unseat Amazon Japan’s dominance. For example, Japanese online fashion retailer Zozotown has launched the Zozosuit app, which allows online shoppers in Japan to order custom alterations to their clothes and have them delivered. Similarly, international clothing retailer Uniqlo is using its home market of Japan to test AI functionalities on its e-commerce app, enabling customers to receive product recommendations and voice-activated customer service.
As we can observe, businesses can definitely take advantage of the ecommerce boom in Japan and around the world. It will be interesting to see which players dominate and which others innovate in this highly competitive space.
We at DMFA have a new ecommerce solution that allows you to sell on PayPay Mall, and we are the only overseas partner who can get your product into this exclusive marketplace. Our bilingual consultants will help you with a three-way agreement to work with a Japanese ecommerce agency and sell your products on PayPay Mall. Fulfilment, logistics and customer support will be taken care of as long as you can provide the inventory. Contact us to learn more about this new solution.