Many entrepreneurs are trying to expand their business into international markets, but the language and cultural barriers can make it difficult. One country that is often overlooked is Japan – the third-largest economy in the world with a GDP of $5 trillion.
With so many people living in this populous and wealthy nation, there’s plenty of opportunities for your company to flourish. The information in this article will include:
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According to the Japan Times, "online shopping is not yet a big hit in Japan. Despite consumers' familiarity with e-commerce transactions in other aspects of their lives, they still feel reluctant about buying foreign products."
However, that doesn't mean enterprising individuals and businesses can't sell overseas online. In fact, there are many companies selling products from outside of Japan. With the technology we have today and the Internet at our fingertips, it doesn't matter where your products are made as long as you know how to sell to that market online directly.
Japanese consumers prefer domestic websites for their familiarity and their low prices; overseas sites are used more by businesses than individual buyers.
The majority of Japanese consumers, when surveyed by Rakuten Research, said they prefer to buy products from Japanese websites (56%). Only 13% said they would rather buy foreign products online at a site abroad. It could be due to the fact that consumers don’t feel comfortable with purchasing from sites that don’t speak their language.
More businesses than individual buyers are using international sites like Rakuten or Facebook marketplace to sell (17% vs 9%), and more repeat customers use US websites than new recruits (11% vs 6%). This may just show that individuals trust domestic brands over those from overseas. However, obviously there is still room for massive growth in this area.
Between 2010 and 2015, eCommerce sales in Japan grew at a rate of 18.8% annually. This was higher than the average growth for Asian-Pacific regions, with 5.6%, and the world, with 12%. Ecommerce turnover in Japan was US$90 billion as of 2015 with retail e-commerce accounting for 14%.
In Japan, the four largest eCommerce companies are Rakuten, Amazon, Yahoo! Auctions, and Mercari. These large companies had an impact on Japan’s eCommerce sales growth in recent years.
Rakuten's online store "Rakuten Ichiba" is by far the leader with over 100 million registered users and around 3 million sellers on its network. It offers everything from groceries to electronics to clothing through its site.
There are millions of people in Japan that don't speak English, so it's very important to have an understanding of the Japanese language. If you can sell your website successfully without speaking Japanese there are a number of social media sites and apps that sell for you automatically, most notably, Facebook marketplace and Amazon marketplace.
Japanese eCommerce market is similar to the US. In its review of the international eCommerce markets around the world, Accenture stated, "Despite some differences…Japan has a lot in common with other developed economies." It states that Japan's economy relies more on domestic markets than foreign ones.
Businesses selling on Rakuten and Facebook marketplace don't have to worry about this, but businesses opening their own shops do. They must sell from a physical location in Japan unless you are importing products. This means your business name should be registered as such in Japanese.
It's also important that you understand the legal implications of selling online in Japan including sales tax, consumption tax, withholding tax, work safety laws, labor laws for employees, employment contracts, privacy protection laws (for data), etc…This is where local accountants come in handy.
Obviously, due diligence is very important before entering the market.
Before launching an online shop through Rakuten or any other eCommerce platform we recommend conducting thorough research on customer behavior and buying habits of your target market. Once you know what your customers want and why they buy from you, it will be easier to sell them online.
It's very difficult to sell products online in Japan without local support, such as a legal and an accounting firm. Local accountants are the most effective tool for tax filing and VAT at the time of sale. Setting up merchant accounts and acquiring knowledge about payment procedures, use of discount coupons, etc. can also be costly.
There will also likely be some fees associated with these services on top of those required expenses.
Japan operates its eCommerce much like Americans and Europeans do: mobile shops, sharing economy apps, etc. There could even be more similarities than differences between selling goods in Japan and English-speaking nations, so understand how your target market behaves in both markets before trying to sell abroad.
Shipment support is available in Japan. All of the dominant eCommerce sites in Japan have their own shipping carriers, so it's important to choose a shipping carrier that is known and respected.
As stated above, Japanese consumers utilize every mode of online and offline purchasing possible. They don't buy only from your website -- they shop at brick-and-mortar stores often too. Make sure your carrier is able to deliver items to those locations, as many consumers prefer pick up to home delivery. This can help to sell your products at a higher rate and increase sales overall.
As with any country, you have to figure out why customers want your products. Don’t just sell them something because it's popular in another overseas market. Japan has many sophisticated consumers and will easily see through empty marketing tactics.
They appreciate authentic brands and honest presentation of your product, so sell them a real story -- add value! Have presentations available for your potential customers who may be interested in buying from you. It could be anything from sample packs, pictures, or even videos.
The most popular and promising categories in Japanese eCommerce are the following:
Since Japan is very legal about taxes and getting local advice helps sell online, it's important to contact an accountant before setting up shop, even if you're not going to sell there officially. Your potential customers could request that your product be delivered into the country, so understand what you need for that to happen legally before selling.
If shipping internationally sounds like something you'd like to do eventually, this will help get everything set up for later expansion.
Credit card penetration is still very low in Japan. Only about 25% of online shops sell through credit cards instead of over 90% in other developed countries. Japanese people trust cash transactions more than digital ones and believe they are more secure. Facilitating payment by mobile phone can lower your risk of fraud because you can manage payments directly.
The local language barrier is also a problem for many eCommerce merchants, but there are popular apps that actually sell goods locally for non-Japanese speakers to sell on their behalf, including companies such as Amazon and Rakuten. This allows them to sell in Japanese without knowing the language.
It is not easy to open a Japanese store online, but with some careful consideration and good research, you can make it happen. You will need to consider the initial setup costs for your company in Japan as well as shipment support. Update your marketing strategy to sell in Japan using the tips from this article. Be aware of how your customer’s preferences to shop and sell accordingly.
Make sure to develop a plan for payment options before making an attempt to sell online directly, as credit card penetration will be low -- this might also mean you have to sell locally first and then expand internationally if it becomes popular enough. Take advantage of this opportunity and use this information from this article to start marketing and building your online store in Japan today!
As Japan's eCommerce powerhouse, Rakuten Ichiba boasts a whopping customer base of 100+ million shoppers. What better place to roll out your store and promote your brand than a popular marketplace frequented by 87% of the Japanese population?
Our team of bilingual eCommerce Consultants is here to answer any questions and guide your store through the process. It’s important that you know what sets our platform apart from other marketplaces like Amazon, eBay, or even Etsy.
Benefits include a unique Lens On Brand experience where merchants can fully control their storefront—from product pages to customer experiences—to give off an authentic feel for their products without having to worry about how it will affect SEO performance or brand image in search results pages.
We also offer full support throughout the merchant’s journey with concierge-level service and cross-border reach as well! If this sounds intriguing, get in touch with us to learn more about the exciting opportunities for eCommerce merchants in Japan!