Online Sales in Japan – 3 Trends You Need to Know

Posted By Jim Kersey

Japanese ecommerce growth has been staggering over the last decade, even before the pandemic drove more people to choose online shopping over brick-and-mortar (something many people thought unlikely for older demographics given the nation’s love affair with local shops and cash payments).

For ecommerce businesses looking to drive online sales in Japan, there have never been so many opportunities available, but neither has there been this much competition — coming from all directions, including big-name physical retailers moving online to stabilize sales, new domestic players, foreign merchants using cross-border sales models and existing ecommerce sellers fighting to stay in the game.

Thriving in this landscape requires local insight and quick action for brands who want to secure a future for themselves in the third largest ecommerce market in the world after the US and China. We discuss three ecommerce trends to pay close attention to!

Table of Contents

  • Older Demographics Flock to Ecommerce to Fulfill their Needs
  • Growth Opportunities for Businesses with Strong Supply Chains and Logistics
  • Big Retail Brands Look Online for Sales

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Older Demographics Flock to Ecommerce to Fulfill their Needs

Older Japanese couple using virtual shopping for online sales in Japan

Japan has a high density of small local stores and markets located throughout any urban city – a partial consequence of the lack of space in the average Japanese household, preventing many families from stocking up on products in large amounts and forcing them to regularly visit close-by shops for essentials on an almost daily basis.

Traditionally, ecommerce has lacked the same level of trust and reliability as these brick-and-mortar shops for older generations, who have developed strong long-term relationships with shops and shop owners in the local community.

Yet, as we’ve seen in many nations, older generations who are more at-risk when it comes to Covid-19 have been forced to switch to ecommerce to reduce the chance of infection. And for many, this was the first time they had shopped online. As time has passed, familiarity and confidence has grown among many older segments who continue to look to online shopping as a way to fulfill their needs.

This is a new and blossoming consumer group that brands are now competing to capture — now focused on promoting transparency, ease of use and reliability in order to build long-term loyalty with a consumer group known for having considerably higher spending power than younger Japanese shoppers (due to the fact that age still closely correlates with seniority and salary in Japanese society).

0-14 years 12.49%
15-24 years 9.47%
25-54 years 36.8%
55-64 years 12.06%
65 years and over 29.18%

Source: CIA World Factbook

With Japan’s rapidly aging population, brands will be wise to build their future strategies around older groups, paying close attention to their drivers and preferences when it comes to ecommerce shopping.

For instance, the National Consumer Affairs Center of Japan reported a significant rise in problems relating to shopping online among those aged over 60, including ordering multiple products by mistake and issues canceling orders, caused largely by a lack of experience using online platforms.

Adapting online shopping experience, product pages and even products to be more user-friendly for these groups is key.

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Popular Product Categories for Older Shoppers

There is now an even greater demand in Japan for products that are of high-quality and reliable, as well as products and services that help meet the needs of Japanese seniors.

According to Santander’s foreign investment profile for Japan, medical equipment, pharmaceutical products, biotechnology, safety equipment, and dietary supplements are among the key areas of opportunity within the national economy.

As well as driving demand for these products, there is a growing need for more convenient and reliable home delivery services and accommodating customer service quality.

Product Type % of Shoppers
Groceries 31
Electronics 24
Beauty & personal care 19
Clothing/shoes 18
Household products 14
Luxury 12
Alcohol 10
Home & furniture 10
Medicine & healthcare 9
Financial products 9

Source: GWI

Growth Opportunities for Businesses with Strong Supply Chains and Customer Service

Ecommerce owner handling online sales in Japan

The pandemic put a huge strain on both global and Japanese ecommerce supply chains and logistics.

  • Fulfillment and delivery staff shortages were caused by rising infection rates and self-isolation while demand for online products grew substantially, contributing to late deliveries and operational mistakes
  • The import of both raw materials and finished products from abroad was hampered, due to the knock-on effect of the pandemic on the global shipping industry (causing many shipments to be delayed)

As a result, we’ve seen many ecommerce sellers fail to meet the needs of their customers in Japan – who have historically had very high standards of quality when it comes to customer shopping experiences.

Major ecommerce platforms such as Amazon and Rakuten, with their substantial distribution locations and delivery networks, have made gains over the last few years due to their ability to handle the surge in demand.

Both these ecommerce giants have announced plans to expand their operations by building new fulfillment centers and hiring more staff (up to the figure of 100,000 for Amazon). In this sense, businesses must be mindful of the need to match the customer experiences offered by companies like this, or consider tapping into their networks through programs like Fulfillment by Amazon.

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Big Retail Brands Look Online for Sales in Japan

AEON company – moving into online sales in Japan

As ecommerce sales have grown, sales generated at the physical shops of many big-name retailers in Japan have dipped substantially. For many companies, investing in online infrastructure is the only way to compensate for this.

While Japan has a number of incredibly popular tech and electronics stores like BicCamera and Yodobashi Camera throughout its major cities like Tokyo and Osaka (inhabiting monstrously-sized buildings home to an almost endless variety of products ranging from video games to home appliances), many have turned to to ecommerce options for consumer electronics — a segment that exploded in 2020.

With restrictions and concerns over the spread of COVID-19 deterring shoppers from visiting these typically busy venues, these same companies have channeled their efforts into growing their online sales in Japan.

For instance, the retail giant AEON Group is expected to be one of the biggest investors in online infrastructure in the near future, with investments of over JPY500 billion in developing its online presence. The company also partnered with UK company Ocado Solutions to develop its online operations and integrate with the Ocado Smart Platform.

More Advanced and Rewarding Online Shopper Experiences

To differentiate themselves, brands are looking for new features and services for customers to elevate the online shopping experience. This includes live streaming, virtual showrooms (VR ecommerce) and digital sales assistants — helping to give potential shoppers something close to an in-shop experience.

Companies are expected to continue investing in ways to build and develop better online customer experiences to strengthen long-term relationships with shoppers and stand out from others.

Equally, we’re seeing more Japanese people shop on their phones, driving the growth of the mobile ecommerce market. Creating a smooth and friendly mobile shopping journey is a no-brainer for ecommerce sellers operating here.

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The Importance of Your Brand

Our final trend worth taking note of is the increasing power of brands in the ecommerce landscape. New entrants to the Japanese ecommerce market who want immediate, measurable results tend to undervalue brand building, which is a longer-term investment.

Yet, while conversions and short-term sales revenue is important when you’ve just started selling here, most consumers already have a brand in mind (proven by Google research) by the time they look for a product, and many also prefer domestic brands over foreign ones.

All this is to say that investing in brand building is crucial if you want to do well with your new Japanese audience and guarantee sales in the long-term. As the Japanese ecommerce space becomes more crowded, brand identity and brand awareness will become one of the most crucial drivers of success.

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