Crowdfunding Japan: How to Kickstart Growth in the Japanese E-commerce Market

Posted By Joseph Howe

Crowdfunding can be an exciting method of raising capital in order to realize unique and creative projects. The concept has been well-established in the west, with websites such as Kickstarter, Indiegogo, and Gofundme being recognized as market leaders in attracting community investment. Focusing on Japan, crowdfunding has only recently attracted greater attention in the media, with platforms being utilized by single women to fund their quest to find love, or even give individuals the unusual opportunity to date Hello Kitty.

You may be reading this because you’re determined to secure capital for your impressive new idea, have an already successful overseas product that you believe is great for the Japanese market, or you might simply just be fascinated by the concept and intrigued to see how it fits within Japan. Whatever the reason, we hope you’ll be able to take away some key insights and useful information regarding the great potential of Japanese crowdfunding.

This article will discuss the potential of crowdfunding in Japan, the specific formats available, as well as mentioning a few of the websites dominating the scene. Additionally, we will address the factors that should be taken into consideration before jumping straight in. Within this article, we will be specifically targeting the reward-based crowdfunding model, which has two aspects; ‘All or nothing’ (fundraisers hold the money only if targets are met) and ‘All in’ (a flexible type that allows fundraisers to hold onto the collected money).

What is the potential of crowdfunding in Japan?

According to a report by JSIF (2015), crowdfunding in Japan used to be mainly geared towards the marketing of manufactured products, tackling social issues, and the production of entertainment content such as video games and anime. Looking to the present, it’s intriguing to see how this has developed in quite a few ways, especially with a stronger presence of foreign brands and variety in the types of campaigns being executed.

On Ready for, one of the original Japanese market leaders in crowdfunding, half of the funding towards proposed projects come from females who are in turn supporting this social progression of Japanese women.

When searching “クラウドファンディング” (Crowdfunding) in Google, the page will be flooded by a variety of links and ads trying to grab your attention to their website. This is not surprising when looking at the average yearly search volume for the term in Japanese, where it has been on an upward trend since 2011. This signal of constant interest and awareness makes it a great time for brands to approach the market in this way.

AVERAGE YEARLY Search VOLUME for “Crowdfunding” in Japanese

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

Calculated using data from: https://app.kwfinder.com/

There has been rapid growth in the scale of domestic crowdfunding, with the “Purchasing Type” format having a total market value of ¥6.258 billion (around $55.7 million USD). This is the more commonly understood rewards-based crowdfunding format, where consumer investment in a project is in exchange for a product or service.

Kickstarter Japan – What international platforms are available?

Okay, great! Clearly there is potential in grabbing a slice of the crowdfunding cake in Japan, but you may be wondering what role the big international crowdfunding platforms play in Japan.

To cut (or slice) straight to the point, a foreign company trying to access the Japanese market, would be better off trying to push the product on the mainstream domestic channels in Japan that will be discussed in the next section. This is due to the fact that international platforms have not managed to breakthrough the Japanese mainstream yet. The only instance of this happening has been the introduction of Kickstarter to Japan in 2017.

However, it’s not quite what you may be imagining.

In the past, there have been many cases of Japanese backers pledging towards global campaigns that feature on crowdfunding giants such as Kickstarter, Indiegogo and Gofundme. However, there has always been an issue going the other direction: Japanese creators trying to access the worldwide market in order to gain international financial support.

In 2017, Kickstarter decided to bridge this gap and help Japanese creators launch international projects by allowing them to use their Japanese bank account and identification documents. At the time of writing this blog, Kickstarter is still in its early stages in Japan, but currently has more than 900 active projects. The New York based crowdfunding platform has made the website fully accessible to Japanese creators and backers by creating a dedicated customer support and project review section in Japanese. The company has relatively low fees associated with funding campaigns, with the Kickstarter fee being 5% of total funds raised, and the payment processing fee being 4.5% of the total amount.

So if you were wondering if you could access Japanese consumers via these renowned crowdfunding sites (Kickstarter, Indiegogo, Gofundme, etc.), yes, it is possible. However, you would be missing out on a larger percentage of the Japanese market by not localizing your product and crowdfunding on domestic Japanese platforms.

What domestic platforms are available?

Returning our attention back to Japan, there are more than 170 domestic crowdfunding sites to choose from, but there are only a few that are dominant on the scene.

CAMPFIRE KEY FEATURES

Japanese Crowdfunding Platform Campfire Logo

Site Visibility (Via SiteProfiler) 1.4 million+ (Total visits per month)
Total Commission Fee 17%
Campaign Format Available All or nothing + All in
  • Many of the campaigns are geared towards helping the growth of the Japanese economy or starting something new in Japan.
  • They have been able to secure funding for 17,000 projects, raising ¥8.6 billion in total.
  • The platform runs their own online promotional channel, Campfire Magazine, that selects products they think deserve attention.

MAKUAKE KEY FEATURES

Japanese Crowdfunding Platform Makuake Logo

Site Visibility (via SiteProfiler) 1.4 million+ (Total visits per month)
Total Commission Fee 20%
Campaign Format Available All or nothing + All in
  • They have a strong social presence, especially as they are owned by the media company – CyberAgent.
  • Possibility of featuring in the Makuake booth located at the Isetan in Shinjuku.
  • Most Makuake patrons are of an older demographic (30-50 age group). Therefore, many of the products are directed towards that age range.

READY FOR KEY FEATURES

Japanese Crowdfunding Platform Ready For Logo

Site Visibility (via SiteProfiler) 500,000+ (Total visits per month)
Total Commission Fee 17%
Campaign Format Available All or nothing
  • Ready For place a greater emphasis on social and humanitarian causes, with more than 7,100 projects being funded to this date.
  • Each year, projects have the opportunity to be nominated for a grand prize at the “READY FOR OF THE YEAR” event, attracting a lot of media attention.
  • Most of the projects have higher targets due to the large costs associated with social causes.

MACHI-YA KEY FEATURES

Japanese Crowdfunding Platform Machi-ya Logo

Site Visibility (by analysis*) 90,000+ (Total visits per month)
Total Commission Fee 23.6%
Campaign Format Available All or nothing + All in

*Analysis conducted through SiteProfiler Tool

  • One of the smaller and up-and-coming crowdfunding platforms.
  • Projects are mainly technology & design oriented.
  • Although all the platforms have strong connections to media outlets, Machi-ya have a reputation amongst technology websites such as Gizmodo and Lifehacker due to the futuristic and intelligent design of products hosted on the website.

If you would like more information regarding these platforms, feel free to send us a message with any questions you might have.

LET’S TALK

Factors to take into consideration

So we can see that a few of the Japanese platforms available each have their own strengths and weaknesses. It’s definitely worth browsing a couple of the websites and getting a feel of the products they have on offer, as well as looking at the kind of visibility that a project might receive. For example, most campaign websites will mention any media channels that have featured their products, emphasising the kind of publicity that their idea has attracted. But before jumping straight into submitting a campaign proposal, there are some major factors that need to be considered. These include; market feasibility, content localization, technical points and generating awareness of your product.

MARKET FEASIBILITY

In terms of feasibility, it’s crucial to make sure that the product is a right fit for Japan. Have you checked if there are any similar items on the market? Will the product appease Japanese people’s obsession of superior quality, design and functionality? Are you aware of any cultural differences that may undermine the product’s usability? For example, a nice set of silver cutlery made out of recycled materials might sound great in most countries, however, in a country where they predominantly favor the use of chopsticks over knives and forks, the idea may not attract that much attention.

Our recommendation:

You may already be aware of the target market from previous research carried out in your home country. However, it is worth looking into whether a Japanese equivalent of the product already exists.

One method of trying to do this is by working out what the product is called in Japanese, get that translation and plug it into the crowdfunding platforms or search engines to browse what is out there. The page may be difficult to decipher, however, this should still provide a useful insight into the kind of products available. If other companies have successfully sold it here, there’s good reason to believe that a market demand exists. Additionally, if there are similar products available, try and think about what makes yours better (especially in terms of quality, design and functionality).

It is also worth researching to see if any aspect of Japanese culture hinders the product’s functionality. In most cases it will be fine, but you want to make sure that the product is accessible and appealing to Japanese consumers. This may involve further digging, or asking someone for advice!

Trying to work out if something similar to your product already exists in Japan? Send us your idea and we'll look into it for you using our domestic research tools.

LET’S TALK ABOUT YOUR PROJECT

CONTENT LOCALIZATION

This factor is crucial in terms of really understanding your new audience, how they perceive the product, as well as any messages they interpret from the content. Localization means that you have considered cultural consumer psychology, and have ensured that both the images and text will be easily understood by Japanese shoppers. For example, is all the online content accurately translated into Japanese?

In terms of consumer psychology, localization plays a significant role in how Japanese people interpret messages and images on a website. Therefore, is there enough information on the page, as well as a number of detailed images?

Our recommendation:

Firstly, it’s embarrassing to even have to say this, but yes—you should avoid online translation services where you just input your text and copy & paste the output. This will just result in broken Japanese that will be incomprehensible and will undermine the professionalism (and conversion) of your company. Look into translation services that have previous experience in digital marketing or with past crowdfunding campaigns. There may even be a need to change the name of the product if it has an unexpected (possibly negative) connotation in Japanese!

When thinking about how many images or how much content to incorporate within the campaign, in a high context country like Japan, the concept of “less is more” is not the case. Rather, more information is what Japanese consumers like to see. People in high context cultures are used to contextual messages, and will often look for deeper and implicit meaning from visual images. Therefore, try to highlight the product’s functionality and practicality through the use of clear images accompanied by detailed text.

TECHNICAL POINTS

There are a lot of small technicalities that should be remembered before rushing straight into submitting a campaign. For example, will you want to receive the funding money in an international or Japanese bank account? It’s crucial to know that some platforms will only send to domestic bank accounts. Then, it’s essential to work out how the orders will be dispatched and how potential returns will be dealt with. Some products may actually face restrictions and will need authorizations to be able to import and distribute in Japan. Therefore, check beforehand if this is the case with your product.

Our recommendation:

Research which platforms are willing to send the funds raised to international bank accounts, if not, consider finding a partner that will be able to collect the money on your behalf.

The logistics side can also be fairly complicated. Work out if it will be cheaper to import all your stock into Japan and settle distribution domestically, or whether it is feasible to individually ship each item internationally from wherever you are based. It’s crucial to remember that import taxes and tariffs will play a significant factor in the decision you make.

In terms of restrictions, some health products, cosmetics, electric goods, etc. have certain restrictions imposed on them and will need authorization. This can often be quite complicated to research, especially with niche products, so if you’re unsure about this and need some assistance, feel free to contact us and we will be more than happy to help.

AWARENESS

Remember that the success of a campaign is also heavily dependent on whether it can generate enough interest surrounding the product.

It is vital to think about the potential channels that the product will be promoted on. Remember that certain social media platforms are bigger in Japan than they are in the West. Will you be utilising influencer marketing strategies or focus on more traditional forms of advertising?

Our recommendation:

It’s often rare for products to succeed without any help from advertising strategies. Most products will at least need an initial boost for the product to be picked up by Japanese consumers and potentially shared amongst their friends. Try and work out a target demographic for your product and research the social media channels that they are more prolific on. Running an advertising campaign that is directed towards specific users on these platforms could be a possibility, attracting greater investment and conversation around the product.

This factor is also heavily related to content localization, where it is recommended to make sure that the social media posts and images take into consideration consumer psychology and what “high-context” consumers want to see. Consider creating a promotional video that will highlight your products functionality, as well as incorporating Japanese consumers, so that the viewer can relate to the video and see themselves using the product in a similar environment.

Summary

Crowdfunding is definitely an exciting concept in Japan, with huge potential for foreign companies to attract investment by introducing innovative and functional products to the Japanese consumer market.

We hope that after reading this brief introduction to crowdfunding in Japan, you will have learnt about the growth potential of reward-based crowdfunding, discovered the platforms/sites which you can bring your project into, and finally come to understand the cultural and technical considerations.

It can often be frustrating trying to understand consumer dynamics within a foreign country, especially with cultural variations and language barriers, but we hope that you’ve found some takeaways to help you find the right path forward. Of course, if you would like to learn more about how to bring your unique project to Japan and how to optimize your strategy to attract greater attention, send us a message and we’d be happy to answer any questions you may have!

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