Online Shopping Market in Japan – Unique Shopping Mall or Global Interface
October 31, 2016
If you have never visited Japan, I’m pretty sure you will picture a lot of common stereotypes. For instance, you might think Japanese really eat sushi every day (I still get this question often) or that you can still find Ninjas everywhere in Japan (I wish I could meet them). As a native Japanese living in Europe, I keep correcting such typical impressions of Japan. However, I have to admit that some Japanese habits are quite unique.
This “uniqueness” seems to apply to the online shopping industry as well. Japanese online players sometimes struggle to explain to the public why online channels are better than 24h-open convenient stores, which you can be find almost anywhere in Japan. Let’s check together the peculiarities of the e-commerce in Japan.
Japan ranks 4th globally for e-commerce sales volume
First of all, let’s take a look at the global position of the Japanese online market. The data below helps to understand the actual e-commerce sales volume by country. China is growing as a giant sales power, followed by USA, UK, Japan and Germany.
If we look at “EC ratio” – e-commerce sales percentage of total retail sales, you will be surprised to find that Japan’s ratio is not very high. Table 2 shows that Japan was ranked 10th worldwide. Later statistics (overall e-commerce sales ratio including both retail and B2B) show an even lower rate: 4.75% in 2015 (Ministry of Economy, Trade and Industry in Japan, June 2016). These results show that online shopping is not yet the first choice in the Japanese market.
Table 2: Percentage of retail e-commerce sales and forecast (eMarketer 2015)
Online shopping mall very popular in Japan
One of the unique characteristics in Japan is that the online shopping mall, a marketplace for online shops and consumers (B2C market), is very popular. The graph below describes the total trading volume per online shopping mall including ASP cart platforms. The total trading volume by top 3 players (Rakuten, Amazon Japan and Yahoo Group) is more than 5,600 billion yen – which is approximately 56 billion USD or 62 billion Euro (as of 1st October 2016), and represents nearly two thirds of the total e-commerce sales in Japan.
Graph 1: Online trading volume in Japan in 2015 (Empower Shop Inc., 2016)
The largest online shopping mall in Japan is Rakuten. The total trading amount in 2015 for Rakuten (including Rakuten Travel – popular platform for hotel booking and plane tickets in Japan) is 2,682 billion yen (26 billion USD or 29 billion Euro ). It looks like a big amount. However, you should consider that this amount doesn’t represent the sales volume by Rakuten itself, as “trading amount” is the total sales amount by all the shops on the shopping platform.
As of 1st October 2016, Rakuten includes 42,748 shops and 227 million products are offered. This means an average sales volume per shop of around 0.06 billion yen (0.60 million USD or 0.67 million Euro) per year, and each shop has around 5,300 products on average. This figure describes one of Rakuten’s characteristics well. Each shop on Rakuten focuses on a few product categories only. For example, the largest shop included in Rakuten in 2015 was SALONIA, which only sells organic beauty-hair products.
Rakuten recommends that each shop is unique, to differentiate itself from competition, and supports only the minimum common format for product information. You can still search and compare the product you want to find as below, but you have to visit each shop for product details. And unfortunately for non-Japanese consumers, Rakuten Japan only has a Japanese interface.
Image 1: Rakuten’s homepage
Amazon, the most successful online shop in Japan
Feeling a bit lost in finding where to shop online in Japan? No worries, Amazon Japan is here. As in other countries, Amazon Japan includes its own online shop as well as a marketplace. When you take a look at Amazon’s own retail shop sales, you can see how big it is in Japan compared to other online shops. Table 3 below has been just published in the newspaper “Tsu-han Shinbun” (30th September 2016) and indicates the online sales volume per shop in 2015.
Table 3: Online sales volume per shop in 2015 in Japan (Tsu-han Shinbun 2016)
On top of the list is Amazon Japan (own shop sales only) with total sales of around 1,000 billion yen (10 million USD or 11 million Euro), which is more than 10 times the amount of the 2nd player, Yodobashi Camera. Yodobashi Camera is also a giant among electronic shops in Japan, similar to Media Markt in Europe. So, you can imagine how high Amazon Japan reaches.
One of the benefits for non-Japanese users is that Amazon Japan is using the same interface as other Amazons over the world, and it is available not only in Japanese but also in English and Chinese. Currently, Amazon Japan is dealing with more than 200 million products in total, which is almost the same as counted on Rakuten.
Image 2: Amazon Japan’s homepage
Rakuten shopping mall or Amazon Japan – which one do you prefer?
We just looked at the two major online shopping platforms in Japan, Rakuten and Amazon. Figures clearly show that both platforms are well frequented by consumers in the Japan, but they are very different concepts.
It can be said that the concept of Rakuten mall represents the uniqueness of Japan. If you would like to enjoy a real feeling of shopping in Japan, Rakuten shopping mall would be the right place for you, as you can shop around a range of unique special stores to find the product you like. It requires knowledge on the Japanese language and trends, but that is also good, since it allows you to completely experience our culture.
On the other hand, Amazon Japan is like an American hotel chain such as Hilton or Intercontinental. It will not surprise you, but you will feel comfortable and sure of what you have to do. There is no challenge, you will be able to find quickly exactly what you want, without wasting much time. It may be too simple to experience the culture, but it is a great advantage for busy online shoppers.
So how about you? Which platform would you try? At least in my opinion, it is good to have two choices to recommend to people outside Japan, one very unique Japanese platform or a simple global and useful platform. However, I wonder if the situation would change in case Rakuten starts supporting a kind of international interface with multi-languages.