The attitudes and behavior of Japanese consumers are shifting dramatically, presenting opportunities and challenges for New Zealand companies in the world’s second-largest retail market. The Japanese consumers have had very different shopping habits to New Zealand consumers. In the past the Japanese preferred high-end department stores and pricier regional supermarkets. They were willing to pay high prices for quality products, and their love of brands sparked the emergence of a mass-luxury market where owning expensive, exclusive products seemed essential rather than aspirational. Over recent years Japanese consumers are reducing costs and questioning their famous inclination to pay for convenience choosing to “spend time to save money” rather than “spend money to save time.” Japanese people are also spending less time out shopping and socialising and more time at home. With this trend there has been an increase in online shopping. Japanese consumers also feel more comfortable comparing products and their prices as well as experimenting with new products when purchased in the privacy of their own home.

Traditional Sales

Over the last decade, department stores have seen a significant drop in profits. However, food products have actually seen a growth in department stores due to their premium nature and the presence of depachika (basement level with food stores common in Japan and South Korea). Because department stores often stock their stores with premium products, they have become a popular spot for gift purchasers and tourists.

 

E-commerce

The Japanese e-commerce turnover grew by 7.8% to more than US$114bn in 2015 according to the E-commerce Foundation’s latest report. Japan is ranked 4th behind China, the U.S., and the U.K. in e-commerce sales. Approximately 77% of Japanese consumers shop online with an average spend of $1,488 per e-shopper. Surprisingly, Japanese aged 55+ are the most proliferate online users, marking a potential market for e-commerce merchants. Japan’s younger generation can be classed as the social-commerce generation, with c2c platforms proving to be very popular amongst them. The three most popular ecommerce sites in Japan are:

The three big ecommerce sites in Japan, in order of market share, are Rakuten, Amazon Japan, and Yahoo Japan Shopping. Taken together, these sites account for roughly 50 percent of total Japanese annual ecommerce revenue. These sites allow third-party vendors to sell on them. The ease of setup and doing business varies among the sites. Amazon is the easiest to get started with, followed by Rakuten, and then Yahoo Japan Shopping. The three marketplaces also have in-house teams to support and educate vendors.

There are companies that offer setup and on-boarding services to companies, to sell on these marketplaces. One approach for selling on Rakuten, for example, that has proved effective is to partner with an existing Rakuten vendor, one that is already authorized by Rakuten to sell products. The existing vendor just needs to procure products — outside of Rakuten — from the new seller. This is usually faster than the new seller working with Rakuten directly.

ECOMMERCE trends

M-COMMERCE

Japanese e-shoppers made 14% of their online purchases via mobile devices, taking mobile sales to US$16bn in 2015. People compare retailers and products on smartphones before deciding where to shop and what to buy.The majority of major online stores also have phone apps or mobile capable websites. Sixty-seven percent of those devices used iOS, followed at 32% by Android operating systems.

PAYMENT
In the past Japan had a strong cash culture, however this is changing. Credit cards are the most popular ecommerce payment method in Japan. But other payment methods — such as cash on delivery, convenience store payments, and bank transfers are also popular.

FAST SHIPPING

Just like in many other East Asian marketing shipping is fast and is expected to be. Most orders are delivered the same day or the next. If an order takes more than two days, customers expect an explanation from the merchant. International shipments take longer, some Japanese ecommerce sites have a separate section for international shoppers, to display only the products that can be shipped to them.

LOYALTY & PROMOTIONS

Japanese culture values loyalty. It is common for e-commerce merchants to reward loyal customers with prizes and progressively larger discounts. Promotions are important for Japanese online consumers. Almost everything is marked down to some extent to align with the culture of “getting a deal.” Some sites allow promotional codes to be used on top of already-marked-down products.

PRODUCT RETURNS

Product returns are very low in Japan. This drastically reduces the operational costs for most sites. It also makes it easier to sell on the large marketplaces. Returns are so rare that some sites do not even have a return policy.

CUSTOMER SERVICE

Japanese ecommerce sites have excellent customer service. An international retailer or manufacturer selling in Japan should ensure that it has Japanese-speaking customer service personnel, as 99 percent of residents speak only Japanese. Some marketplace sites, like Rakuten, allow third-party sellers only if their customer-support personnel speaks Japanese.

TAX

Foreign businesses providing electronic services or products will experience a consumption tax of 8%. The tax must be collected by the seller and paid to the government.

Holidays

Japanese culture places a heavy emphasis on the four distinct seasons-and this is reflected in the changes in consumer purchasing habits and patterns of gift-giving throughout the year.

SEASONMONTHSALES, PROMOTION, EVENTS AND HOLIDAYS
Spring March High School & University Graduation events
White Day (Valentine’s Day for women)
Sakura (cherry blossoms) travel
Fiscal Year begins – job rotation
April New school year begin events
Entrance ceremonies for companies–sales, promotions
May Mother’s Day
Golden Week –holiday sales, travel, events
Summer June-July Father’s Day
Ochu-gen, summer gift giving
August Obon holiday promotions
Autumn September Respect for the Aged day
October - November Oseibo, years’ end gift giving
Winter December Christmas sales
New Year’s & end of year sales campaigns
January Coming of Age holiday
Setsubun (end of winter) promotions
February Valentine’s Day (for men)
Fiscal Year ending promotions by companies

Social Media

LINE

Currently, 68 million Japanese are using LINE, which is more than 30% of LINE’s total active users worldwide. What’s significant about LINE users is that they are active, very active on the daily basis. 71% of users use LINE every day. 96% of users use it every month.

 

TWITTER (26 million monthly active users)

Twitter was able to take off in Japan, especially among those aged 15-24. For many years Twitter was more popular in Japan than Facebook. Below are several of those reasons:

  • Anonymity: Privacy is important in Japan, and Twitter allows users to use fake names. Twitter serves as a platform for Japanese users to express emotion anonymously.
  • 140 Characters: In Japanese, you can say almost double what you can say in English with 140 characters.

 

FACEBOOK (25 million monthly active users)

Facebook’s user base in Japan more than doubled from 6 million to 13.5 million between 2011 and 2012. Facebook, is often used in Japan for business purposes. Many Japanese have adopted Facebook as a tool for business communications. The social network’s interface and use of real names makes the site a good place to cultivate professional relationships. Moreover, Japanese companies have begun to recognize Facebook’s potential for business and commercial purposes, which is another reason to its success.

INSTAGRAM (8.1 million monthly active users)

Instagram’s user base nearly doubled from 2014 to 2015, going from 4 million users to 8.1 million. As a relative newcomer, the photo-sharing social network shows strong growth in Japan. The bulk of the current user base for Instagram in Japan are female. Women aged 18-40 account for over 55% of its total users in Japan. The rise of Instagram comes with the proliferation of smartphones and high-speed mobile connections in Japan. As young people are more likely to use smartphones, Instagram’s demographics skew young to reflect that.

Influencers and celebrities are among some of the most popular accounts on Instagram for Japanese users. In fact, some Japanese celebrities like @_megbaby_ have gotten famous solely from their Instagram accounts.

However, hashtag usage isn’t widespread among female Instagram users in Japan, so brands have to rely on tapping into existing large followings of their own or others to increase engagement. Instagram’s link to Facebook is also important to leverage.

 

MIXI

To join Mixi, one needs to be invited by an existing member. You also need to be 18 or over. Your Mixi URL contains a unique user number: since these began at 1 and increased sequentially, it's easy to tell how recently a user joined. And because Mixi is invite-only, none of these URLs are indexed by Google. Mixi's site design and navigation are extremely intuitive. Your homepage displays a selection of your friends, a list of their latest blog posts and photos and the latest news from your communities.

Blogging

Japanese blogging platforms are hugely popular. Japan also leads the way in time spent reading and engaging with blogs.  Platforms such as Ameblo go beyond simple blogging and allow you to create an avatar which you can dress and use to engage with other Ameblo users. The most popular blogging platform, FC2, has now launched in multiple languages and localities.