By the end of this year, the e-commerce market in Japan is estimated to be valued at around US$90 billion and is projected to grow at an annual clip of 16 percent through 2015. When it comes to popularity, e-commerce comes in fourth (or 46 percent) as the most popular online activity among Japanese, behind search (92 percent), checking news (90 percent), and emailing (88 percent). And within the mobile world, 57.5 percent of Japanese mobile users have made a purchase in the last year through their smartphone device, according to a survey by Net Asia.
E-commerce is certainly big business in Japan. And there is tremendous room for continued growth as well. The smartphone penetration rate currently is hovering around 22 percent. Therefore, as smartphones become more dominant, e-commerce should track right alongside it. Also, as Japan continues to face difficult macroeconomic problems – unfavorable exchange rates, flat consumer spending, and a general higher cost of doing business in the brick-and-mortar world, more and more companies will aggressively shift to e-commerce, as their key growth and cost efficiency play. Shisedo, a major Japanese cosmetics conglomerate and global brand in its own right, made a recent announcement that it is launching a massive e-commerce effort within Q2 of this year, to capitalize on the growing trend of its user base who are now buying more and more online.
So of these companies who have either just launched an e-commerce initiative or is soon to enter the space, what can they do to quickly drive business results and demonstrate to their management that e-commerce is indeed the way forward? Based on my observations over the past six years in this market, I have put together six key tips on what you can do to drive success in e-commerce here in Japan.
Tip 1: Be aggressive with search. Your search program (SEM and SEO) should be one of your most important channels. In Japan, Google is now the leader, so companies should focus more of their SEM activity there. Also, both engines put a premium on sites that are well SEOed, so ensure you have a robust SEO plan in place. Japan is a very competitive market with SEM, so be sure to use a good bidding technology and test out your positions, as you don’t always have to bid in the top positions to see solid results.
Tip 2: Drawing them in with content. E-commerce sites tend to overly focus on the booking process and lack the experience piece. In Japan, I have seen some recent great examples of sites developing out quality-themed content incorporating standard text articles, video snippets, and social integration elements to provide a superior layer of user experience that enhances and facilitates the buying process. And if optimized well for SEO, this content could also act as a major traffic driver for your business.
Tip 3: Being accessible for mobile. The current smartphone penetration rate is hovering at 22 percent but by 2014 estimates say it will be well north of 60 percent. This represents a prime opportunity for marketers to develop mobile-friendly platforms for their users and also create mobile and shopping aided applications. Also, right now, more people access the Internet are on their mobile rather than PC, so this will be a huge opportunity to actively engage in mobile-based SEM campaigns to drive your e-commerce traffic.
Tip 4: Play the targeting card. Japan has evolved in the targeting space over the past two years. Companies likes Audience Science, Criteo, RightMedia, and others have entered the market and have started to change the game. The ability for e-commerce players to target specific audiences down to age, gender, interest, and behavior across numerous networks has vastly helped them increase their return on investment and gain massive data learning at the same time. This will be the future.
Tip 5: Invest in branding. Japan is still a somewhat mass media market and consumers tend to favor and want to do business with more visible and popular brands. Therefore, it will be critical for any e-commerce business to allocate some budget toward brand-building activities. Whether it’s traditional display activity, brand events, hiring a local brand ambassador, or even running TV, this will help boost your brand and enable you to become more favorable in the minds of consumers.
Tip 6: Building your sales force. What is an e-commerce business without a sales channel? And by sales channel, I mean affiliate marketing. In Japan, affiliate marketing is still huge business and a very reputable channel, whereas in other parts of the world it has become somewhat soiled. The top affiliate networks, ValueCommerce, TrafficGate, A8, and Linkshare provide a big opportunity for ROI-centric marketers to cultivate and build your affiliate partner network. This is a must-have in this market.
If there is any company in Japan that gets it in the e-commerce space, it is Rakuten. It has been at the forefront in this market and has helped accelerate the category as a whole, paving the way for a lot of the new e-commerce players that are currently doing well, including the likes of Amazon.
Well there you have it. These are my six tips to do well in e-commerce in Japan. The market is big, and only getting bigger. Those marketers that spend the time to learn the market and focus on the most critical factors to success – search, content, mobile, targeting, branding, and affiliate will have a solid foundation for success.
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