The Japanese e-commerce market is one of the world’s largest and most sophisticated. With the right approach, it can also be highly profitable. The average Japanese e-commerce shopper spends over $1,735 a year with online merchants . And since 2020, new demographics have come online and are spending with e-commerce outlets.
As in most Asian economies, there’s no sign yet of Japan suffering the rising inflation we’re seeing in Western countries. Its inflation rate at the time of going to press was just 1%, up significantly from 0.1% last year, but still low by the standards of many developed economies . The IMF predicts it will fall to 0.8% in 2023, still well below the central bank’s 2% target. The fund predicts that growth will spike at 2.4% this year, before falling to 2.3% in 2023 . Remarkably, and bucking international trends, Japanese consumer confidence was still rising in the second quarter of 2022, at the time of going to press .
Japan’s e-commerce market
Japan is the world’s fourth-largest e-commerce market, with annual sales valued at US$218 billion and growing at a rate of 7% a year . The most popular Japanese e-commerce purchase categories are travel (18%), food and drink (14%), and health and beauty products (12%) . The average online shopper spent US$1,735 a year .
Japanese consumers buy 13% of all e-commerce purchases from overseas merchants . The value of these goods is more than US$26 billion a year at the last count . Ten percent of all retail purchases are made online — and 27% of these are completed on a mobile device .
Seventy percent of Japanese consumers have shopped online at least once . Since the pandemic, older consumers (Japan is an ageing society) have started to shop more online. Merchants report almost a 10% increase online shopping by the over-70s . However, this important demographic may not be getting the best user experience. Between 2010 and now, the rate at which elderly consumers have contacted citizens advice about problems with online orders has increased by 350% .
Payment methods in Japan
Japan is one of the Asian markets most similar to the Western standard for payments. The Japanese pay for 62% of online transactions using a credit card . But in Japan, alternative payment methods are also widely used. E-wallets are the most popular method payment alternative, with an 11% market share . 6% pay using bank-transfer apps, 4% with cash and 17% with assorted other payment methods. Local and alternative card schemes dominate the card market, with a 43% market share . Visa has 32%, Mastercard 22% and American Express 3% .
Enabling and limiting factors in the Japanese e-commerce market
98% of Japanese have a bank account and 68% a credit card . What financial exclusion there is, exists mainly among smaller marginal populations such as the unemployed, disabled, foreign residents and the low-income elderly .
Over 93% of Japanese have an Internet connection and 68% have an Internet-enabled smartphone . Japan has one of the world’s highest-quality broadband networks. Nevertheless, in 2020 the communications ministry made US$496 million available to local governments to build long-distance, high-performance data networking and telecommunications, mainly for the benefit of remote and rural communities .
- Original PPRO research
- Financial Inclusion and Japanese Society, March 2016, Japan NPO Center (PDF)