E-commerce in Japan - statistic & facts
Japan is one of the world’s largest e-commerce markets thanks to its highly developed digital infrastructure and widely affordable internet connection. Secure online payment services, a highly efficient postal service sector, and a comparatively small geographical size make order fulfillment and delivery a smooth and quick process. Although the demand for Japanese brands in the international market has worked in favor of cross-border e-commerce trade, domestic sales take precedence in the once physical transaction-focused country.
While B2C e-commerce cannot hold a candle to the size of B2B trade, the segment has the highest growth potential, with only nine percent of overall physical merchandise sales in the country attributed to online channels. Online retailers have successfully become a viable sales channel for durable goods like books, consumer electronics, and household goods, but progress in cosmetics and food retailing remains sluggish. A similar trend is observable in the C2C segment, as Japanese shoppers are looking towards flea market apps and online auctions to get the best deals on clothing and durable goods during an economically challenging time.
As B2C market growth is falling into the single-digit range, e-commerce businesses will have to reinvent themselves to draw in hesitant users. Understanding the shifting online shopping behavior amid demographic changes, investing in innovative technologies, and promoting the strengths of a digital sales strategy to internal stakeholders and business partners are only some of the challenges online businesses will have to face to win the tug-of-war with retail stores.
Businesses and consumers in online transactions
The Japanese e-commerce market is split into three main segments characterized by business-to-business (B2B), business-to-consumer (B2C), and consumer-to-consumer (C2C) transactions. The B2B segment upholds the market with its estimated value of over 500 trillion Japanese yen, boasting almost 20 times the size of the consumer-oriented markets. Nowadays, the share of e-commerce in overall commercial B2B transactions is on an upward trend and closing in on the 50 percent mark.While B2C e-commerce cannot hold a candle to the size of B2B trade, the segment has the highest growth potential, with only nine percent of overall physical merchandise sales in the country attributed to online channels. Online retailers have successfully become a viable sales channel for durable goods like books, consumer electronics, and household goods, but progress in cosmetics and food retailing remains sluggish. A similar trend is observable in the C2C segment, as Japanese shoppers are looking towards flea market apps and online auctions to get the best deals on clothing and durable goods during an economically challenging time.
The tug-of-war between physical and online
The Japanese e-commerce market is largely fragmented, as online marketplaces, retailers, and manufacturers with D2C retail channels are vying for market share. Online marketplaces like Amazon, Rakuten Ichiba, and Yahoo Shopping have become indispensable for the stability of the market, shifting some power away from physical stores. Small- and medium-sized enterprises show high e-commerce penetration and are also more open to increase investment to develop the channels compared to their large-scale counterparts.As B2C market growth is falling into the single-digit range, e-commerce businesses will have to reinvent themselves to draw in hesitant users. Understanding the shifting online shopping behavior amid demographic changes, investing in innovative technologies, and promoting the strengths of a digital sales strategy to internal stakeholders and business partners are only some of the challenges online businesses will have to face to win the tug-of-war with retail stores.
