A comprehensive guide to the Japanese ecommerce market

Sophola, a Japanese-based consultancy focused on helping global companies enter the Japanese ecommerce market, created a comprehensive guide, Cracking the Japanese Market, which provides a detailed overview of Japan’s current ecommerce ecosystem.

The guide contains incredibly useful information about where and how Japanese consumers shop online and focuses on leveraging automation as a solution to help streamline the process of setting up shop in one of the most promising retail marketplaces on the planet.

In this post, we will provide a high-level summary of the guide, which is available for download here.

Content produced in collaboration with Sophola.

An overview of Japanese consumers

Japan is the world’s fourth largest ecommerce market, representing $122 billion in 2018. Three platforms—Rakuten, Amazon and Yahoo! Shopping account for over one-third of all online retail transactions in Japan and comprise nearly 100 million users.

Japan is a tough market for outsiders to break into, with one of the lowest cross-border shopping rates. Just over 10% of Japanese consumers shop on overseas websites versus 54% of US shoppers.

Japanese consumers require a lot of information before they make a purchase, which is important for companies from other countries to understand as it has a direct impact on the look and feel of product listings and website design.

Since Japanese consumers are extremely loyal to their shopping platform of choice, these platforms are a good place to start for foreign companies interested in entering the Japanese market. Establishing an account on one of the three top shopping platforms and leveraging automation are low-risk alternatives to establishing a Japanese subsidiary website.

Japan’s top three ecommerce platforms

Rakuten and Yahoo! Shopping are Japan’s top shopping marketplaces. Rakuten has  more than 100 million members and has a strong share in the fashion and food categories.

Product page taken from the English version of Rakuten’s website

American brands that set up shop on Rakuten’s platform have their own storefront and product listings. They can also advertise via sponsored product listings and leverage other advertising features on Rakuten such as coupons, newsletter ads, and banner ads. Rakuten has its own fulfillment service called Rakuten Super Logistics.

Businesses located outside of the US or Japan currently cannot join the marketplaces directly. Both Rakuten and Yahoo! Shopping require that non-American companies who want to create accounts with these platforms either start a local company or work with a local agency to set up the accounts on their behalf.

Writes Sophola, “To start a Rakuten account as a non-American company, you have to either start a local company, work with a Rakuten service provider, or work with a local agency who will set up the account on your behalf.”

Amazon, the third top ecommerce platform in Japan, provides a relatively easy way for foreign companies to sell products to a Japanese audience.

“One clear advantage of selling on Amazon for foreign companies is that they can register their own seller account, rather than selling through an intermediary,” writes Sophola.

In this way, it’s fairly easy for companies who already have an Amazon seller account to get a foothold in the Japanese market. Amazon’s fulfillment service handles fulfillment from Japan, but companies must have a Japanese company act as an importer of record (IoR) to deal with customs. Amazon also requires that all sellers provide customer support in Japanese.

A word about language

An important aspect of operating in Japan is understanding how keywords are handled. The Japanese language has three different writing systems in addition to the Roman alphabet.

Per Sophola, “As a result, keywords can be written in a number of different ways and the combinations are further increased by variations in spaces and word order. This is in addition to the typical variation introduced by synonyms.”

Thus, it’s important for foreign companies to work with native speakers who have a deep understanding of which keywords are appropriate to use, word order, and writing systems.

Setting up your own website (and how automation can help)

Having your own ecommerce presence in Japan comes with some challenges which include setting up your store on a Japanese domain with a local payment gateway, dealing with order fulfillment, customer service, and returns—all of which require set up and management.

It’s also important to address the expectations of Japanese consumers who value transparency and detailed information.

From a fulfillment perspective, Sophola recommends connecting your store to Amazon’s FBA (Fulfillment by Amazon) as a way to streamline and automate the fulfillment process.

Writes Sophola, “This allows companies to start fulfilling orders within hours of setting up their store and offers competitive scalable pricing and virtually no upfront costs.”

Automating inventory systems can help foreign companies streamline the process of setting up a localized store outside of one Japan’s top three marketplace platforms.

A more complete view of the Japanese ecommerce market

Sophola’s guide provides additional context around the changing Japanese ecommerce landscape including the role digital advertising plays in promoting products.

There is a particular focus on Yahoo! Japan, which is one of the most visited websites in the country with nearly 63 million mobile users representing 90% of all mobile users in Japan.

For a more comprehensive overview of the Japanese ecommerce market, download a copy of Sophola’s white paper: Cracking the Japanese Market.