Market Overview: Size and Growth of the Japanese eCommerce Market
Japan’s ecommerce market is valued at approximately USD 170 billion, with steady growth driven by high internet penetration and a tech-savvy population.
Key Statistics and Trends:
Ecommerce sales in Japan have been growing at an annual rate of around 10%. Mobile commerce is a significant driver, with over 70% of online shoppers making purchases via smartphones. The rise of cross-border ecommerce, with Japanese consumers increasingly purchasing from overseas websites.
Japan’s Ministry of Economy, Trade and Industry (“METI”) released its annual eCommerce Market Survey which reported that Japanese consumers engaged in USD $3.1 billion worth of cross-border online shopping from U.S. outlets, an increase of 9.3% from the previous year, indicating that Japanese consumers are buying more products not only from Japanese online stores but also from U.S. online retailers as well.
Comparison with Other Major Markets in Asia:
While China dominates the Asian ecommerce landscape with its massive market size, Japan offers a more stable and mature market environment. Compared to other Asian markets, Japanese consumers have higher purchasing power and a strong preference for quality and branded products. Technological innovation, product reliability, energy efficiency, and brand reputation strongly influence Japanese buying decisions. The country’s well-established culture of ‘gift-giving’ also plays a significant role in purchasing luxury and high quality goods.
In Japan and China, consumers lean towards ‘discreet luxury,’ appreciating craftsmanship and heritage, whereas in Indonesia, the Philippines, and Vietnam, luxury goods often symbolize status and success. Brands need to position their products differently depending on the local perception of luxury.
Markets like China and Singapore are more mature, with a high penetration of food delivery services, while in countries like Japan and Vietnam, these services are still in their growth phase. The level of market saturation will determine the competitive strategies brands must adopt.
In countries like India and the Philippines, cultural factors and festivities can significantly influence big-ticket purchases, while in markets like Singapore and Japan, consumers are more likely to be swayed by technological innovation and reliability.
Decoding consumer habits across Asian markets | Kadence
Consumer Profile of Japanese Shoppers
Japan has a high median income and one of the highest standards of living in the world. However, economic slowdown and changing consumption patterns have influenced purchasing behavior, especially among younger generations.
The population is aging, with a median age of 49.2 years, with more than 1 in 10 people in Japan aged 80 or over. However, younger generations (Yutori or Millennial generations) are generally more open to new brands and products. Nearly 50% of people under the age of 25 work part-time, earning around $100–500 a month (Statistics Bureau of Japan, 2021).
Importance of Quality and Brand Reputation: Japanese consumers have traditionally preferred quality over mass consumption. High standards for product quality and service expectations, including the sales process, delivery, packaging, and after-sales service, are prevalent. However, economic pressures have led some consumers to seek lower prices and products of lower quality, particularly among the younger generation.
Japan Infographics | HKDTC
Effective localisation is crucial for success in Japan. Japan is slipping further down the international rankings for spoken proficiency in the English language, with the latest study by the English Proficiency Index placing the country 87th of 113 countries, behind Malawi and only narrowly ahead of Afghanistan. Because of this, Japanese consumers prefer engaging with content in their native language, and culturally adapted marketing strategies are more effective. This includes localized websites, customer service, and marketing materials.
Brand Loyalty and Innovation
Japanese consumers are known for their brand loyalty, although this is more pronounced among the older population. Younger consumers are more open to exploring new brands and products. Nearly half of the population uses social media regularly, primarily to watch videos and follow influencers for product opinions. Approximately 75% of consumers consult social networks before making purchases, especially for cosmetics and fashion items.
Economic Influences on Consumption Patterns
The economic crisis has shifted consumer behavior towards lower-priced consumption. There is a noticeable trend of consumers preferring to take time to save money, as seen in the increasing preference for cooking at home rather than dining out. While Japan remains the third-largest luxury goods market globally, the average shopping basket value has decreased due to a preference for cheaper products.
Changing shopping habits
Japan impact of price increases | Rakuten
Environmental Concerns and the Collaborative Economy
Environmental Concerns and the Collaborative Economy: Interest in environmental issues has grown, with more than half of the population showing increased concern over the past year. However, willingness to pay more for environmentally responsible products remains low.
International Brand Appeal
Japanese consumers are open to buying international brands, particularly for everyday consumer goods. They are attracted to products from countries perceived as specialists in certain categories, such as Swiss watches and French wines. Japan remains a key market for luxury brands, with LVMH Group’s global revenue share from Japan at 7% in 2021 (Statistica).
Preferred Payment Methods and Buying Habits
Popular Payment Options
Credit cards are the most commonly used payment method, accounting for over half of all eCommerce transactions.
Digital wallets and mobile payment options, like PayPay and Rakuten Pay, are gaining traction.
Convenience store payments (Konbini) and cash on delivery are also popular, catering to consumers who prefer offline payment methods.
Online Buying Behaviour and Preferred Shopping Platforms
Japanese consumers favor reliability and efficiency in their online shopping experiences.
Rakuten and Amazon Japan are the dominant eCommerce platforms, offering extensive product ranges and user-friendly interfaces.
Shopify is a fast growing platform in the region, growing 93% year on year. Social commerce and platforms like Mercari (a popular resale app) are also significant, reflecting the Japanese consumer's propensity to engage in second-hand sales.
Shopify on the Rise in Japan
Despite established regional eCommerce platforms, Shopify is gaining ground in Japan's eCommerce market. Shopify merchants in Japan increased by 93% year-on-year in Q1 of 2022. Although Rakuten Ichiba remains Japan's largest eCommerce platform with over 100 million customers, Shopify has strategically integrated Rakuten Ichiba into its platform. This integration allows Shopify merchants in the US and Japan to manage their Rakuten stores directly through Shopify, facilitating seamless operations and broadening their reach.
The State of Ecommerce in Japan | Humble Bunny
Shopify's commitment to the Japanese market has paid off significantly. Since establishing a presence in Japan in 2017, the company has seen a 300% increase in Japanese merchants signing up. This success is attributed to a localized approach, partnering with agencies and app developers who understand the unique needs of Japanese consumers and e-merchants.
Shopify is also expanding its payment solutions to cater to Asian consumers. By integrating popular payment services like PayPay, which has over 39 million users, Shopify enhances its platform's appeal and functionality for Japanese merchants. The company's focus on providing a merchant-centric platform with high ROI has been key to its growing popularity in Japan.
The Japanese logistics landscape, supported by advanced infrastructure and technology, provides a solid foundation for eCommerce growth. Platforms like Shopify are increasingly important players, offering versatile solutions that cater to the unique demands of the Japanese market and helping businesses thrive in this competitive environment.
Shopify Active Stores over time | Store Leads
Overview of the Japanese Logistics Industry
Japan is highly dependent on imports, with sea freight being a primary mode of transport. Major port cities such as Osaka, Kobe, and Yokohama play crucial roles in facilitating the import and export of goods. These ports are not only pivotal for international trade but also serve as critical hubs for domestic distribution.
Japan Infographics | HKTDC
Port of Tokyo
Located in the heart of Japan's industrial and economic activity, the Port of Tokyo is one of the largest seaports in the Pacific, handling approximately 90 million tonnes of cargo annually. The port employs over 40,000 people and is vital for the importation of goods.
Kobe Port
As the fourth busiest port in Japan, Kobe Port handles around 80 million tonnes of cargo each year. It has 34 berths dedicated to container handling and is connected to more than 450 port cities globally, making it a key player in international trade.
Port of Nagoya
Nagoya Port is the largest trading port in Japan, managing over 10% of the country's international trade. It is particularly significant for the export of automobiles, with companies like Toyota using this port to ship vehicles worldwide.
Port of Osaka
Handling over 80 million tonnes of cargo annually, Osaka Port is a major gateway for trade, with links to about 140 nations. It plays a crucial role in both import and export activities.
Port of Yokohama
One of Japan's major ports, Yokohama handles about 350 million tonnes of cargo annually. It is an essential hub for containerized cargo, with facilities that support a wide range of shipping activities.
Japan's logistics industry is underpinned by a strong infrastructure, essential for supporting its large manufacturing sector and the resulting demand for storage and distribution of goods. Shipping companies like Yamato Holdings are among the global leaders in logistics, reflecting Japan's commitment to maintaining a robust logistics network.
Major Airports in Japan
In addition to its extensive port network, Japan's logistics landscape is supported by several major airports that facilitate the efficient movement of goods both domestically and internationally. These airports are crucial for handling air cargo and ensuring timely deliveries.
Narita International Airport (NRT)
Located near Tokyo, Narita International Airport is one of Japan's busiest airports for international cargo. It handles a significant portion of Japan's air freight, with state-of-the-art facilities for cargo handling and customs clearance. The airport serves as a major hub for international trade and logistics.
Haneda Airport (HND)
Also situated in Tokyo, Haneda Airport is a key player in domestic and international air cargo. Its proximity to central Tokyo makes it an ideal choice for time-sensitive shipments. Haneda has advanced logistics facilities that cater to the growing demand for air freight services.
Kansai International Airport (KIX)
Serving the Osaka region, Kansai International Airport is another major hub for air cargo in Japan. It has extensive cargo facilities and is strategically located to handle shipments to and from the Kansai area, which includes major industrial and commercial centers.
Chubu Centrair International Airport (NGO)
Located in Nagoya, Chubu Centrair International Airport plays a vital role in air cargo logistics. It supports the export of goods from the central region of Japan, particularly for industries such as automotive and electronics.
Fukuoka Airport (FUK)
Fukuoka Airport is a significant airport for domestic cargo in Japan. It serves the Kyushu region and is essential for the distribution of goods within Japan.
Customs Compliance and Filing Procedures
Compliance with Japan’s Advance Filing Rules is crucial for efficient logistics management. Retailers must ensure that all cargo information is submitted electronically and accurately 24 hours before the vessel departs the loading port. In case of disasters or system failures, specific procedures must be followed to manage discrepancies and correct previously submitted information. These steps help maintain smooth shipping operations, reducing delays and enhancing customer satisfaction.
Key Statistics and Trends:
Japan handled approximately 4.71 billion tonnes of domestic freight in 2021, with foreign trade contributing another 900 million tonnes.
The Japanese freight and logistics market is expected to grow at an annual rate of over 4% between 2022 and 2027, driven by the booming eCommerce sector.
Japan boasts the third-largest eCommerce market globally, necessitating efficient logistics solutions to meet the high expectations for fast and reliable deliveries.
Japan Infographics | HKTDC
Technological Advancements
Japan is rapidly adopting new technologies in logistics to enhance efficiency and meet market demands. Innovations such as automation systems, drone technology, and advanced tracking facilities are being integrated into logistics operations.
Impact of the COVID-19 Pandemic
The pandemic significantly impacted the logistics sector, with many supply chain executives reporting revenue decreases due to travel restrictions. However, the surge in eCommerce and home delivery services during this period has also driven growth in the logistics industry. The shift towards online shopping, especially among older demographics, has increased the demand for efficient delivery solutions.
Strategic Importance
Japan's strategic location in East Asia makes it a pivotal hub for logistics in the Asia-Pacific region. The country’s developed infrastructure, high urbanization rate, and substantial personal wealth create an ideal environment for eCommerce growth. Major B2C platforms like Amazon and Rakuten, along with C2C platforms like Mercari, have seen significant growth, further driving the need for robust logistics solutions.
In summary, Japan's logistics landscape is characterized by its reliance on imports, strong port infrastructure, technological advancements, and the growing eCommerce market. These factors collectively contribute to a dynamic and rapidly evolving logistics industry.
