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Japan is the world’s third-biggest economy . Its GDP per capita is just under $40,000 . That’s almost four times the global average . The average Japanese consumer spends $1,666 a year with e-commerce merchants . And the Japanese e-commerce market, already worth over $160 billion, is growing by an impressive 9% a year .
Japan is also the third-largest e-commerce market in the world . Ninety-eight percent of Japanese consumers are banked and 93% have an Internet connection . According to research cited by Pitney Bowes, 70% of Japanese consumers shop online .
The story these statistics tell is that Japan is a highly prosperous, developed, cosmopolitan and well-connected market. But there is a growing perception among Japanese consumers that they are getting less value for money than in the past.
This is down to what economists call “shrinkflation”, when manufacturers face rising costs and, rather than put up prices, they reduce the size or quantity per unit of their product . This is causing many Japanese consumers to look for ways to get better value for money.
Just 10% of Japanese consumers shop with e-commerce merchants based overseas 
For comparison, in Hong Kong, that figure is 75% , in the Philippines 50%  and in China 43% . So, what’s different about Japan? This feels like a loss for both parties.
It’s also something of a mystery. It could be that some of the explanation lies in long-standing misperceptions. Western companies may think that Japan, with a culture perceived as being very different from their own, is a difficult place to do business.
There has been a long-running pessimism in Western media about Japan and its economy, which has misled Westerners into thinking that the Japanese market is less desirable than it really is. For years, Western economists, pundits and politicians have been speaking about “Japanificiation”. This refers to the economic conditions which prevail in most of the developed world: relatively low growth rates (compared to previous eras) combined with persistently low inflation.
But this is a highly distorted view of Japan’s attractiveness as a consumer and retail market. If you ignore the gloom around the country’s supposed “low-growth” economy, what emerges is a picture of a highly connected economy with low rates of penetration by cross-border e-commerce specialists. And while we may not be able to pin down exactly the reasons why this should be the case, that it suggests a market rich with opportunity for experienced cross-border sellers.
In other words, the e-commerce competition is very low in this area with high demand.
Japan is a great place to do business. On the World Bank’s Ease of Doing Business Index, Japan ranks higher than countries such as France, Spain, Switzerland and the Netherlands . The country scores well in areas such as ease of starting a new business, protection for investors and ease of trading across borders.
All of these factors — the low competitive market penetration, high levels of connectivity, good financial infrastructure, high level of online spend and a growing emphasis on value for money — all suggest a market with plenty of potential for e-commerce merchants with the market strategy and local insight to give Japanese consumers what they want. And the advantage is bound to reside with the first movers in each category. In which case, the question is, who will be first to overcome their trepidation and go on to make it big in Japan?
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