Localization and Sales on E-Commerce Websites in Japan

Posted By Caylon Neely

Japan is the world’s 4th largest e-commerce market, and it’s projected to continue growing steadily in the coming years. However, successfully selling here requires a strong understanding of local buying behaviors first and foremost. Reason being, localization is key for both online and offline businesses in Japan. This article will help you gain a better understanding of Japan’s e-commerce market, and how to be successful here.

E-commerce in Japan: Where Are We Now?

ecommerce stats for japan in 2016

Japan’s B2C e-commerce market is worth over 10 trillion yen, nearly 90 billion US dollars, and is already well established. With over 76 million online shoppers, spending money online is commonplace. This spending is expected to continue increasing as e-commerce grows and takes a larger bite of sales from traditional retailers.

Knowing that Japan has a highly active e-commerce market with healthy growth ahead of it, it seems like a no-brainer then to dive right in. But before you put on your bathing suit, there are some important considerations to think about.

Japanese Shoppers Are Mobile

Around 50% of all e-commerce transactions in Japan are made on mobile devices, positioning Japan as a leading market for mobile e-commerce shopping. Long train commutes (58 minutes on average in Tokyo) and high mobile-web penetration are the likely precursors to this trend. Japanese smartphone users spend an average of 1 hour and 48 minutes browsing the internet on their phones every day.

Conversion Rates of Mobile Shoppers by Country

*Tap or hover on the graph below to see details.

Source: Criteo

Japanese mobile shoppers show high interaction on e-commerce sites. On average, users view about 8 products when they visit a mobile site, 3x more than the average American mobile shopper. Furthermore, mobile conversion rates are over 10% in Japan, among the highest globally.

Considering these stats, we suggest creating all of your content with equal emphasis on mobile and web platforms. From the initial planning stages; imagery, text content, and user experience must all be considered for mobile and PC users. Globally, sites that are fully optimized for mobile use yield higher conversion rates than non-optimized websites. For Japan, ignoring mobile users alienates half of your potential customers before they even have a chance to interact with your site.

Japan is a Unique Market

Japanese consumers are quite particular about what they buy and how they buy it. Buyer preferences are incredibly unique in Japan, not just in terms of the products that people buy, but also what they expect in the buying process.

For example, music and video media is one of the top 4 categories of online sales in Japan, but the industry is totally different from other developed countries. One might think that a country with some of the fastest mobile web speeds in the world would be quick to adopt audio and video streaming, but physical media, such as CD’s, DVD’s, and books, are still quite popular in Japan. Such streaming music and video services are just now starting to penetrate the market, and they’re hitting slow adoption rates compared to other countries with high Internet penetration. To put it another way, DVD rental stores are still very successful in Japan, due to unique buyer behavior, while they’re almost extinct in many other internet rich countries.

There are many more examples of such preferences and quirks that are specific to Japanese shoppers. It takes an extra degree of attention when entering the Japanese market. You first need to understand if your product or service is viable for this market, online or offline, then look into your options for e-commerce in Japan.

Localization Builds Trust

Percent of Respondents Who Bought From Foreign Websites

*Tap or hover on the graph below to see details.

Source: Nielsen

Only about 32% of shoppers in Japan claim they have purchased products from a foreign website. Many countries have higher rates of cross-border shopping. Considering the homogeneous nature of Japan’s population, having a localized website will be much more inviting and familiar for your customers—making it more effective, and giving consumers more confidence in your brand.

Low cross-border purchases are related to the fact that Japanese people lead the world in distrust of institutions. It’s a safe bet that your brand will be met with a bit of skepticism on its first encounter with a Japanese shopper. Although skepticism in domestic brands can be high, being foreign adds another layer to this if your brand is not established in Japan already.

To lower these barriers, we must remember that localization goes further than just translation. We have previously highlighted how Japanese consumers expect to receive information differently than other cultures. Proper localization strategy can make your users’ experiences feel familiar and comfortable, warming them up to your brand more quickly.

Failing to localize and establish yourself properly in Japan will elicit a lack of trust and reliability from your potential customers. We strongly discourage inbound companies (ventures) from entering Japan without a full localization strategy. There is so much more opportunity to be had by properly localizing and making strong customer connections right from the beginning.

There’s More Than Rakuten and Amazon

E-Commerce Market Share in Japan

*Tap or hover on the graph below to see details.

    Source: PwC

    Rakuten, Amazon, and Yahoo! Japan currently hold the top 3 spots respectively as Japan’s biggest online retailers, with a combined market share of about 40% of the e-commerce market.

    These popular “marketplace” sites add legitimacy to the shipping and payment process, but not to the products themselves. That is the job of a localized Japanese website. As web search is the most trusted form of media in Japan, a buyer will be less likely to purchase if they can’t find Japanese information about your product on the web. For this reason, maintaining a proper web presence is an integral step to establishing your brand in Japan, even when selling on the top marketplace websites.

    The other 60% of Japan’s e-commerce market is divided up among smaller, niche marketplaces and independent retailers.

    An example of a niche marketplace website is the fashion site Zozotown. It focuses on one genre: fashion, and allows various merchants to sell on its website. Websites like Zozotown are good for low-tech items that can fit into such a website’s niche easily.

    However, having a Japanese facing website will benefit any company wishing to sell online in Japan. Considering our previous points about localization and trust, a Japanese website is an essential tool to establish your brand’s commitment to Japanese consumers and gain their trust.

    Furthermore, if you’re only on Rakuten, Amazon, and Yahoo!, you’re turning your back on a 6 trillion yen market of online sales in Japan. Many smaller e-commerce sites are taking advantage of the huge market here. Not having to pay fees to marketplace sites for listing and warehousing is another benefit to having your own Japanese website.

    Everybody Loves Points

    digital stamp card on a smartphone

    If you’ve ever been to Japan, you might have noticed the high prevalence of point card systems at restaurants and shops. This trend has definitely extended into the virtual realm, and it seems to be important to shoppers too. Recent survey data shows that nearly 47% of online shoppers chose a website to shop at based on the ability to earn points.

    There are a number of ways to accomplish this in Japan. The easiest would be to align with one of the many points offering systems that are already available. For example, T-Points and Ponta points systems are two very popular ones that can be used in convenience stores, restaurants, and even car dealerships. If you’re selling on Amazon or Rakuten, they both have their own points systems built into their websites.

    Another option is to reward your customers with your own, homemade, point system. It’s a fun and powerful method to keep customers coming back to your shop and buying more in the future.

    Put Your Plan Into Motion

    If you’ve made it this far, Congratulations on advancing your foray or expansion in the Japanese market. Perhaps you already realize that your company, industry, and brand has its own unique challenges. For more advice about how to position and grow your company in Japan’s thriving market, shoot us a message, and we’ll help you get grounded.

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