A GUIDE TO THE JAPANESE ECOMMERCE MARKET FOR CROSS-BORDER BRANDS

   Japan is the third-largest economy in the world with a GDP of US$5 trillion. GDP per capita is US$42,927 in 2021, predicted to reach US$51,620 by 2026. Japan is the fourth-largest ecommerce market in the world behind the UK, China, and the US.

Ecommerce growth in the market is at approximately 6.24% per annum and estimated to be worth US$143 billion by 2025. Food and Personal Care is the largest segment at US$28 billion in 2021, with Fashion and Beauty the second strongest category, worth US$25 billion, and Toys, DIY and Hobbies (US$21 billion) then Electronics and Media (US$18.9 billion) next.

The Ministry of Internal Affairs and Communications surveys online expenditures and services of Japanese shoppers monthly with a recent report showing a 13.7% increase from January 2018 to January 2020, and households shopping online increasing from 36.3% to 42.8%.

COVID-19 EFFECT ON JAPANESE ONLINE SHOPPING

          ● Like most other nations, Covid-19 pushed Japanese shoppers online, with 45% of respondents of a 2021 survey reporting an increase of online purchases.

 Even before the state of emergency in Tokyo and other metropolitan areas was declared (April 2020), brick and mortar department stores saw a drop in sales but were reporting higher online revenue particularly in the beauty category. After the state of emergency was lifted in May 2020, 46% of consumers said they would continue or increase online clothing purchases.

Researchers at the Nomura Research Institute expect that after Covid ‘calms down’ more people will be and remain online in Japan. As with other nations, the shoppers moving online thanks to the pandemic tended to be older first-time shoppers, initially reluctant to shop online but forced to due to shortages, lockdowns, or product availability, who have now become happy online shoppers and likely to stay online post-pandemic.

INTERNET AND DIGITAL DEVICE PENETRATION

There are 117.4 million internet users in Japan, and internet penetration is at 93% as of January 2021. Internet penetration in Japan is highest in the age groups between 20-59 (all over 97%), with 60-69-year-olds at 90.5% and dropping somewhat in the next age group (70-79) to 74%. Smartphone penetration is similarly high at 82% overall, with 20-29-year-olds the age group with the highest penetration at 93%, and dropping sharply after 59 years of age, with 60-69-year-olds at 64% smartphone penetration, and 70-79-year-olds at 33%. As many people have more than one mobile connection the penetration rate is currently 159.3%.

Social media penetration is also strong with 93.8 million users ? an increase of 4.4 million from 2020 to 2021 ? and a penetration rate of 87%.

NUMBER OF INTERNET USERS IN JAPAN FROM 2015 TO 2019 WITH A FORECAST UNTIL 2025 (IN MILLIONS)

MCOMMERCE JAPAN

Buying on mobile, or mcommerce, is popular in Japan and revenue is rapidly increasing year on year from US$9 billion in 2010 to US$41.5 billion in 201914. Currently, (2021) mcommerce accounts for 45.5% of all ecommerce sales.

PREFERRED ECOMMERCE METHODS (IN BILLION US$)

SOCIAL COMMERCE

According to a 2019 PayPal report, 73% of mobile commerce users prefer using a mobile shopping app, spending approximately US$79 each per month. 20% of users purchase electronic products and fashion through overseas online stores.

Many Japanese brands use social media to connect with their shoppers and often use influencers to promote products usually through a variety of videos. 34% of Gen Z shop through Instagram, YouTube and Twitter.

JAPAN’S DEMOGRAPHICS

The Japanese population is one of the oldest in the world with a median age of 48.4 years in 2020, and is decreasing at a rate of 0.3% per year. The number of people in a household is similarly declining with the latest average at 2.3 people per household. Approximately 60% are couples with or without children, with 35% being one-person households.

● The country’s population10 is 51.2% female and 91.8% live in urban areas. Cities Tokyo, Kanagawa, Osaka, Aichi and Saitama account for 36.4% of the population. Education levels in the country are high with approx. 62% of 25-34 year olds having a third-level education.

HOW DO JAPANESE SHOPPERS SHOP ONLINE?

Japanese shoppers are discriminating, make purchase decisions based on value, quality and style, and like to have a lot of information17 before they make a purchase. While there is strong mobile penetration, Japanese shoppers often use mobile to research purchases, but move to a PC to complete the sale.