Describes how widely e-Commerce is used, the primary sectors that sell through e-commerce, and how much product/service in each sector is sold through e-commerce versus brick-and-mortar retail. Includes what a company needs to know to take advantage of e-commerce in the local market and , reputable, prominent B2B websites.
Last Published: 8/31/2018
Overview
Visit the U.S. Commercial Service’s eCommerce Innovation Lab

Japan is the third largest—and one of the fastest growing—eCommerce markets in the world. The growth rate has become stable over the past few years, with annual growth estimated at 9.1% in 2017. With Internet penetration estimated at 93.3% of the population, Japan represents a significant market opportunity. According to the Ecommerce Foundation’s Japan 2017 report, the E-GDP was forecasted to rise 1.59% in 2017, with 74% of the online population shopping online. Japan’s developed economy, highly urban population, and single language make the market attractive to online retailers. Highly developed distribution infrastructure and small country size make delivery easy and convenient. Market growth is expected to be steady for the foreseeable future.

Current Market Trends
Aiming to investigate the breakdown of the total expenditure, the Ministry of Economy, Trade, and Industry (METI) divided the ecommerce expenses into three categories; A) sales of goods, B) service, and C) digital. 
  1. Sales of goods account for 52.1% of the total ecommerce expenditure. In this category, clothing items hold the first place. The market size has grown by 7.6% from the previous year of 2016. Enterprises such as ZOZOTOWN, Amazon, and UNIQLO have successfully fulfilled the customers’ needs by incorporating internet technology to their strategy. The flea market application, MERCARI also has its influence on the clothing market. Food and beverage sales are continuing to grow steadily, as well.
  2. Service accounts for 35.4% of the total ecommerce expenditure. The most popular trend in this section involves travel. Travel service has grown 11.0% from 2016. These include the online booking service, such as RAKUTEN travel. Food and beverage service was fourth and has a high potential. These can be seen from the online reservation and rating system. However, there are problems with unnotified cancellations and not being able to apply reservation systems into fast food stores.
  3. Digital accounts for 11.7% of the total ecommerce expenditure. The most popular trend was online gaming. Since online games are not only popular in Japan but also in other Asian countries, there will be continuous demand. E-books were the second highest digital ecommerce expenditure. The dissemination of smartphones contributes to the growth of both online game and E-books sales.
One notable trend is that although a large percentage of purchases are conducted online, only 12% of Japanese shoppers purchased from abroad in 2015.

Spending Holidays
Japan consistently has higher online spending in the summer months when Japanese firms are known to give yearly summer bonuses. Average worker bonuses are nearly $3,000 and the spending of that bonus is primarily focused on luxury goods, leisure, and travel. Additional spending holidays include White Day (March 14) and international holidays such as Christmas and New Year.

Selling Considerations
U.S. companies using ecommerce channels to reach the Japanese consumers or businesses must consider:
  • eCommerce platforms
  • Payment methods
  • Shipping logistics
  • Customer service, returns, after-sales service
Companies looking to enter the market should be able to advertise, brand, and provide customer support in Japanese. The major ecommerce companies in Japan include:

eCommerce Platforms in Japan
Department Stores and Retail Outlets
  • Seibu & Sogo                          
  • Isetan                                  
  • Mitsukoshi                                
  • Daimaru                                
  • Takashimaya                          
  • Aeon                               
Apparel eCommerce Websites Supermarket eCommerce Sites
  • Ito-Yokado                         
  • Maruetsu                             
  • Daiei                                   
  • Apita                                            
Books and Media eCommerce Sites
  • Book-Off                                     
  • Kinokuniya                        
  • Sanyodo                               
  • Tsutaya 
Digital Marketing
Marketing in Japan is incredibly important to a product’s success as most Japanese have internet access, smartphones; and eCommerce is increasing its market share. Recently, digital marketing has become one of the primary ways businesses reach out to consumers. According to a Dentsu 2017 report, the internet advertising expenditures accounted for 23.6% of the total expenditure, which amounts to 6390.7 billion yen.
Mobile advertising is also rapidly expanding. The growth of the performance-based ads and video ads directed at users of mobile devices was significant. In 2016, around 50% of total digital ad spending was spent specifically on mobile ads. Search Engine Marketing (SEM) also accounted for 59% of digital advertising spending in 2016. To reach these segments, Japanese language and knowledge of cultural nuance are required.

eCommerce Intellectual Property Rights
Rakuten and other marketplaces have raised awareness of intellectual property rights issues in the ecommerce sector as they patent business models both domestically and internationally. Intellectual Property rights are strongly enforced in Japan and patents are granted on a first-to-file basis.

“M-Commerce”
One online purchasing trend that cannot be ignored is the rapid increase in “M-Commerce” – mobile ecommerce transactions. Nearly 60% of all online transactions take place on mobile platforms. Popular ecommerce platforms such as Amazon Japan, Rakuten, and Zozo have readily available applications to facilitate mobile commerce setup.

eCommerce Payment Methods 
Japan has several ecommerce payment options. Credit card and debit card payments account for 66% of payments for ecommerce transactions. A variety of other “eWallet” and electronic payment options are also popular. In addition, cash payments for online purchases are accepted at convenience stores (konbini). About 17% of such payments are made in cash at konbini after products are delivered, a popular option for many teens without bank accounts or credit cards.

Opportunities
Commerce Expo Tokyo
B2B trade exhibition. Seminars covering Payment, Delivery & Logistics, Marketing, Customer Service & Customer Retention Marketing, Digital & Mobile Marketing   
February 7 -8, 2019

CEATEC Information Technology Trade Show, Tokyo
Certified by the U.S. Department of Commerce Trade Fair Certification Program
U.S.A Showcase organized by U.S. Commercial Service Japan   
October 16-19, 2018
 
INTER BEE Trade Show, Tokyo
November 14-16, 2018

CS Japan Contact
Ms. Atsuko Shimada, Commercial Assistant
Atsuko.Shimada@trade.gov

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.



Japan eCommerce Industry Trade Development and Promotion eCommerce