Marketplaces dominate the Japanese e-commerce market

The Japanese e-commerce turnover grew by 7.8% to more than US$114bn in 2015 according to the E-commerce Foundation’s latest report.

The Japan B2C e-commerce report released today paints a picture of resilience and market opportunity in the face of declining total GDP and tepid consumer confidence. With a well-developed e-commerce infrastructure and a digitally sophisticated population that drives mobile sales, Japan maintained its 4th rank behind China, the U.S., and the U.K. in e-commerce sales. Here’s what the report had to say.

Market characteristics
Japan has a well developed e-commerce system that ranks 6th on the UN’s global e-government index. The B2C e-commerce market is dominated by marketplaces with Amazon and Rakuten identified as the two most popular e-commerce sites in Japan, based on number of users. And these marketplaces work hard to promote and reward loyalty through the use of copious “special” promotion codes for loyal customers.

Japan's e-shoppers
Approximately 77% of Japanese consumers shop online with an average spend of $1,488 per e-shopper. Surprisingly, Japanese aged 55+ are the most proliferate online users, marking a potential market for e-commerce merchants.

In line with marketplace dominance, 7 out of 10 Japanese consumers are registered on Rakuten’s site — approximately 95 million users. These e-shoppers respond well to e-commerce marketplace advertising and are motivated by the broader access of goods available online in addition to “getting a good deal”.

Japan has strong smartphone penetration at 54% which also transfers over to online shopping. The report indicates Japanese e-shoppers made 14% of their online purchases via mobile devices, taking mobile sales to US$16bn in 2015. Sixty-seven percent of those devices used iOS, followed at 32% by Android operating systems.

Early adopters of credit and debit cards, Japanese e-shoppers turn to it 61% of the time shopping online. While Visa and Mastercard branded cards have dominance, merchants often also support JCB – a strong domestic card brand. But other payment methods — namely bank transfers at 19% and cash at 13% — remain popular. At just 1% usage eWallet solutions have not yet gained traction.

Deliveries and returns
Product returns are very low in Japan, partly due perhaps to the lack of transparency of return processes many brands and retailers in Japan. The low return rate, however, significantly reduces operating costs for most online sites. It also makes it easier to sell on the large marketplaces.

Alexei Loginov, Business Intelligence Manager at Asendia explains, “Click and collect is still an underdeveloped option in Japan, as is locker pick-up, although Rakuten is making strides in developing its network. As for home delivery, customers now expect to be able to set the delivery time and date for the majority of purchases.”

That means international merchants shipping to Japan will need to manage delivery time expectations.

Download free light versions of the of the Japan report and other Global e-commerce market reports here.

Tags: News, Research, Japan

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