Selling on One of Japan’s Largest Online Marketplace? This is what you need to know!

October 4, 2022 by
Frank Calviño

Text: Frank Calviño // Photos: Rakuten

Sponsored by Rakuten - One of the most readily available markets worldwide, Japan is a land of both opportunities and challenges in equal parts. It is by no means an easy market to delve into, and yet, for those wise and patient enough, it could be a literal gold mine, especially for American brands.

To successfully sell in Japan, a solid plan and well-thought-out strategy are required. The plan should cover research on the Japanese market and its potential customers, the best methods available to ship your products, and a thorough review of Japanese regulations.

Perhaps one of the most common misconceptions about the Japanese market is that, due to the language and cultural differences, it is an extremely difficult market to penetrate.

This is not necessarily true. As a thriving culture and economic powerhouse, Japan is not only far from the isolated empire of old, but, instead, is perhaps one of the main global melting pots of technology, pop culture, and entertainment. The average Japanese is fully aware of global trends, global culture, and global technological advances.

The Japanese market: Lost in translation? Not anymore

American businesses, in particular, can be pretty successful in selling in Japan, and with the
the right strategy, selling in Japan can be easy and painless.

Japanese consumers love American products; this is a concept that reaches as far back as the 70s. At that time, one of the biggest fashion staples in Japan was American-made clothing.

Even though times have changed, the influence of American fashion on Japan has only grown stronger over the years. The demand for American products reaches far beyond apparel, too.

Buying from international brands is often seen as a symbol of status. On top of that, American products are synonymous with quality. Japan offers a customer base that is excited about buying American products. Add to this that the Japanese love buying online and have grown to become the fourth-largest e-commerce market worldwide.

Is it profitable? Let’s crunch some numbers

If we look at the numbers, the Japanese e-commerce market is estimated to register a growth of 6.9% to reach 22.4 trillion JPY ($194.3 billion) in 2022, as consumers increasingly shift from offline to online purchasing, says Global Data, a leading data, and analytics company.

An analysis of GlobalData’s E-Commerce Analytics reveals that e-commerce sales in Japan grew at a compound annual growth rate (CAGR) of 5.2% between 2018 and 2021 to reach JPY20.9 trillion ($181.7 billion) in 2021.(1) Not to mention that Japan has also had the highest digital buyer percentage in the region for a few years running.

Especially for e-commerce, Japan could be a heaven scenario. There is an incredibly high internet penetration rate in Japan, coming in at around 89.8%.(2) the Internet usage rate by device for smartphones is 63.3% which is 12.9 points higher than for computers at 50.4%, and online shopping has been steadily trending upward since then and was drastically accelerated in 2020 because of COVID-19, surging by over 50%. (3)

So, in short, the Japanese market is a global economic power market, attractive for any kind of business. But… What is attractive to the Japanese? This is our first question to solve if we want to be successful in Japan.

Customers' expectations and behavior in Japan 

The largest portion of the Japanese economy is made up of middle-class consumers that have a considerable amount of disposable income, which is one of the primary reasons why it is such an attractive market for businesses with global expansion plans. In short, Japanese society has a lot of purchasing power as well as a thriving online shopping culture.

According to Rakuten, one of the largest differences between Japanese shoppers and an existing American customer base is the culture, which can often pose challenges to breaking into the market. One of the best things that a business can do to help bridge that cultural gap is to understand what Japanese customers will expect when choosing an American-made product.

Customers Expect Lower Prices Online

For example, in the United States, about 70% of products are the same price online as
in a physical retail store, and only 22% are cheaper online. However, 45% of products can be purchased for a lower price online than in traditional brick-and-mortar stores in Japan.

With price comparison websites available in Japan, it is easy for Japanese consumers to find the cheapest place a product is sold. This forces retailers to lower prices to meet customer expectations and be competitive.

However, lowering the price is not sustainable for long-term growth, and price should not be the only factor to consider to stay competitive. It’s extremely important to define your value proposition and present additional values to your customers besides cost.(4)

Customers Expect Fast, Flexible Shipping

Again, just as we mentioned before, Japan is a very small country, geographically speaking. This means that most retailers can offer same-day and next-day deliveries. Something that pushes delivery time expectations to the limit compared with America or Europe. Any entrepreneur or brand wishing to sell in Japan must take this into consideration and offer a wide, fast, and flexible catalog of shipping options for its e-commerce.

Fortunately, providing a range of shipping options is easy on a platform like Rakuten, which has a range of options built right in. This high rate of customizability is a perfect way to meet customer expectations and prove you are dedicated to providing your products at their convenience.

Customers Expect Transparency

Japanese people are remarkably straightforward and data-driven. Add to this a cultural enshrinement of honesty, and you have the perfect recipe for a massive disappointment to your customer base in Japan if your e-commerce or brand information is not clear, is slow to arrive at customers, or if it is incomplete.

For example, Edelman Trust Barometer shows this amazing statistic: In 2020, Edelman Trust Barometer Japan Results show that Japan ranked the 7th lowest among 26 countries when it comes to trusting businesses. This means that Japanese customers do not take marketing messages at face value and that they may be skeptical in their purchase decisions.(5)

Also, one of the persisting trends among Japanese consumers is that user reviews are more important than any expert insight. And a great way to help build trust among your brand is to make sure that customer reviews are accessible and that they’re properly translated so that other Japanese shoppers can read them when making their selections.

Customers Expect Detailed Information

Assurance is something that Japanese consumers demand when it comes to shopping online. According to Rakuten, Japanese consumers do diligent research before making a purchase. One way to ensure that as much information as possible in the product description is to use an online marketplace. A platform like Rakuten allows you to do custom product pages that appeal to targeted customers. Ensuring everything is appropriately translated also helps to remove any potential stumbling blocks on the shoppers’ path from consideration to the final purchase.

Customers Expect To Be Rewarded For Their Loyalty

Customers Expect to Be Rewarded For Their Loyalty, 75% of Japanese population participates in some kind of point-earning loyalty program, compared to 40% of USA and 30% of UK, making Japan one of the biggest points-loving nations.(6)

What should your users experience in Japan?

Another key component of dominating the Japanese market is to pay attention to user experience. This market is a mature one because online shopping has been happening for a while in Japan, and the Japanese consumer is more than used to buying online using excellently designed e-commerce sites.

Keep this in mind at all times: you won’t likely be able to surprise them with innovative e-commerce due to the high-quality e-commerce tradition they have, but you should never disappoint them with a lackluster site.
Another thing to keep in mind is that contrary to what happens in the United States, Internet usage penetration in Japan remains high after the age of 50: between 50 and 59, there is a 97% usage penetration, and between 60 and 69, there is at least a 90% of internet usage penetration.(7)

Taking this into consideration, your e-commerce should follow these five recommendations to be successful in Japan.

  1. Optimize mobile device shopping

As much as 73% of Japanese consumers have bought something on their mobile device at least once. Additionally, conversion rates are also as much as 10% higher on mobile devices. Even older Japanese consumers trend towards mobile shopping.(8)

  1. Trust is vital

There is a lot of skepticism among Japanese consumers, and they actively avoid buying from unknown e-commerce sites. Also, less than a third of shoppers are comfortable purchasing products from a foreign website.

To prevent this, there are multiple e-commerce platforms that a business can choose from that already have large user bases in Japan. Rakuten is the one with the largest user base, the largest market share in e-commerce, and the highest monthly active users.
In fact, Japanese consumers tend to favor Rakuten over other platforms; 80% of the Japanese population uses the site for shopping online.(9)

  1. The customer is king

Being polite is extremely important in Japan. Japanese culture is deeply rooted in etiquette and respect. Exceptional customer service comes down to making sure the entire experience is catered to the customers and that you treat them the way that they expect to be treated.

Having an easy-to-navigate site on desktop and mobile, providing reviews for potential customers to read, and thoughtful and thorough product descriptions will be critical to Japanese ecommerce success.

Rakuten provides sellers with great support in the forms of expert training and guidance and with outreach and communication tools built into the platform. There is also the Rakuten Worry-Free Guarantee to help protect customers and provide them with assistance in handling their claims, which helps bolster the popularity of this massive online marketplace.

Rakuten team
  1. More content with higher quality

Very image-heavy and text-heavy pages may not be something that you are used to, as this is typically seen as off-putting and even overwhelming to your existing customer base. However, the use of a lot of images and text on your product pages is going to be something that is essentially required in Japan. These consumers want detailed information and extensive illustration while doing their online shopping.

But keep in mind that having a heavy load with content e-commerce, does not mean by any means producing the content without quality. High-quality content makes you unique and increases your conversion rate. In that sense, the ability to create custom product pages for each individual product that you sell on Rakuten makes this a breeze. Rakuten offers the ability to focus each page on the right keywords to come up in searches, the in-depth features of the product that provide value and bring products to life on their screens.

The most important thing about setting up pages to cater to your Japanese customers is to be diligent about picking the best photos, making sure everything is properly translated, and creating an entirely new design that fits their tastes and grabs their attention.

What’s hot in Japan? 

The Japanese e-commerce market is broken up into three major categories, which are retail, services, and digital content. Retail is the largest category and accounts for over half of all e-commerce purchases made in Japan.

According to a survey conducted by Statista, the most popular type of product that Japanese consumers purchased online was clothing; 41% of responders have purchased clothing online in the past year.

Also, according to Statista, the fastest-growing category among overseas sellers in e-commerce are supplements, electronics, fashion and athleisure, beauty and cosmetics, sports and outdoors, baby and maternity, and many lifestyle categories as well.(10)

Aim for clothing and electronics

Especially clothing and fashion, a category that - according to a survey conducted by Statista - is the most popular type of product to buy online for Japanese consumers, with 41% of responders claiming to have purchased clothing online in the past year.(11)

Following close is the electronics category, one of the fastest-growing categories worldwide. In Japan, according to the list of Japan’s e-commerce market share by category released by METI (Ministry of Economy, Trade, and Industry), electronics is currently accounting for about 10% of the online market.(12)

Japanese consumers shop online for a variety of reasons, and they buy an incredibly diverse range of products. Shopping from international sellers allows them to access products that aren't typically sold in Japan, access more variety, and benefit from lower prices. People buy everything from gifts to groceries, from furniture to fitness gear, and beyond when shopping online.

There are millions of online shoppers in Japan that are purchasing on a daily basis, and the only limit to what they'll buy online is what is available.

Where to be? Rakuten: Japan’s Largest Online Marketplace

We should keep in mind that currently, Rakuten is one of Japan’s largest online marketplace: with more than 26.8% of all online sales taking place on the platform. There are over 100 million Japanese users registered under the Rakuten group.

Rakuten’s Cross Border eCommerce program allows qualified overseas merchants to open up shops on its marketplace with their overseas entities and receive a payout in local currencies. More importantly, merchants will have the flexibility to either ship orders directly from their home warehouses or import inventory to Japan and fulfill orders locally.

In the past few years, Rakuten has helped hundreds of overseas merchants enter the Japanese market and achieve online success. It is undoutedly the most important partner for any overseas retailers to tap into Japan.

Rakuten Japanese e-commerce company.

Finally, the most popular feature of Rakuten is its robust customer loyalty program. This is one of the key things that distinguishes Rakuten from its competitors. This program is called Rakuten Points®.

Customers have the chance to earn Standard Points by making regular purchases as well as Limited Time Points by participating in special promotional events. There are special member days that allow shoppers to earn a ton of extra points, too. During site-wide events and promotions and utilizing Super Point Up (SPU) program, rates can exceed 45 points per 100 yen — a discount that applies to all 300 million+ items available on the platform. These kinds of loyalty programs are wildly popular in Japan.(13)

With all these key elements, and many more, you can find in the Rakuten e-book Why Sell in Japan? Your e-commerce will have all the tools it needs to be successful in one of the world's most readily available markets!

For more details about Rakuten Cross Border eCommerce program, 🔥please visit here: 🔥

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