Industry Trends: Foreign and Domestic E-Commerce Strategies in Japan

Fierce Competition and Positive Outlook:
Key Consumer Preferences in Japan's E-Commerce Market

According to data from the Ministry of Economy, Trade and Industry (METI), Japan's B2C e-commerce market size reached 20.7 trillion yen in 2021, with goods sales accounting for 13.3 trillion yen, service sales at 4.6 trillion yen, and digital products (such as online entertainment) making up 2.8 trillion yen. Market analysis predicts that the growth rate of online sales will far exceed that of the total growth in traditional retail, with an expected growth rate of 7 to 10 times that of the total retail volume in the coming years.

The competition among e-commerce platforms in Japan is fierce, with Rakuten, Amazon Japan, au PAY Market , Mercari, PayPay Mall, and Qoo10 Japan being the main players. Foreign companies like Alibaba and Coupang are also actively entering the Japanese market. After the pandemic, cooperation between major e-commerce and logistics companies is expected to strengthen, such as the partnership between Z Holdings and Yamato Transport, and Rakuten with Japan Post.

A recent survey by Z.com Engagement Lab in Japan shows that Japanese netizens have a fundamentally positive attitude towards the future development of the online shopping industry, with an overall future development index of 59.56 points.

The young demographic of 20 to 39 years old has the highest expectations for industry transformation, with an overall transformation index of 54.74 points.

Additionally, respondents generally hope for reduced government regulation of the e-commerce industry, with a government regulation attitude index of 55.38 points.

In terms of consumer budget, respondents expect their online shopping budget to remain stable over the next year, with a future consumption index of 51.67 points.

More than 70% of Japanese netizens obtain online shopping information through internet devices, with 51% using smartphones, indicating the rising trend of mobile commerce.

Japanese consumers prefer domestic products when shopping online, but also show a high acceptance for products from the United States, Taiwan, and the United Kingdom.

When deciding to make a purchase, cost-effectiveness, practicality, and customer service experience are the three most important factors for consumers.

Navigating Japan's E-Commerce Market for Decision-Makers

In today's rapidly changing e-commerce market, Japan's online shopping industry faces unprecedented opportunities and challenges. According to data released by METI, this industry is at a critical period with immense growth potential. For decision-makers, this means not only the need to devise wise strategies to foster further development but also the need to carefully address potential risks. Here are some opportunities, risks, and strategies for decision-makers in Japan's online shopping industry:

Opportunities

• The purchasing power of the young demographic: Young people aged 20 to 39 have high expectations for industry transformation. Their consumer behavior and preferences should be a key focus for e-commerce platforms and sellers.
  
  
• The rise of mobile shopping: With over 70% of Japanese netizens accessing shopping information through mobile devices, enhancing the user experience on mobile platforms and improving the convenience and security of mobile shopping will be key to capturing the market.
  
  
• The advantage of domestic products: Japanese consumers' preference for buying domestic products provides a unique market advantage for local manufacturers. Strengthening domestic brands and highlighting their quality and value can increase market share.

Risks

• Intensifying international competition: The active entry of foreign companies like Alibaba and Coupang poses a severe challenge to local e-commerce. Maintaining competitiveness will require innovation and differentiation strategies.
  
  
• Increasing competition = higher consumer expectations: High expectations for cost-effectiveness, practicality, and customer service require constant improvement in product and service quality.

Strategies

1. Enhancing customer experience: Improving consumer satisfaction and loyalty through personalized recommendations, optimized mobile shopping experiences, and efficient customer service.
   
   
2. Innovation and differentiation: Developing unique products and services, especially those that reflect Japanese cultural characteristics and innovative technologies, to differentiate from international competitors.

Z.com Engagement Lab will continue to monitor the attitudes of Japanese consumers towards the Online Shopping industry in Japan and update survey data, tracking market trends and changes in consumer demands.