eCommerce in Japan: Podcast Episode with COVUE’s CEO
Our CEO, Scott Scofield, recently hopped on a podcast episode with Tyson Batito to deep dive into the eCommerce scene in Japan.
Scott shared the ins and outs of different eCommerce platforms in Japan, covering everything from their perks to their pitfalls, as well as highlighting why you should think twice before going all-in on AI translation in Japan.
Listen to the full podcast episode here, or dive into the key points below:
In Japan, there are multiple eCommerce players, with some of the top platforms being Rakuten, Amazon, Mercari and Yahoo! Shopping. In this article, and in the podcast, we mainly focus on B2C eCommerce platforms, Rakuten, Amazon and Yahoo! Shopping.
What is Rakuten?
Rakuten, or Rakuten Ichiba, is a Japanese eCommerce platform founded in 1997, averaging a revenue of around 2.1 trillion yen in 2023.
Rakuten boasts a massive user base of over 111.4 million in Japan, which means about 80% of the nation’s population uses Rakuten. Known for its extensive reach and commitment to customer satisfaction, Rakuten has maintained its stellar reputation for over two decades.
They not only have an eCommerce site, but they also have their own loyalty (point) program, credit card and banking system, which are all integrated into their customer journey on the platform. Because of their extensive ecosystem, they offer detailed customer data insights, a goldmine for shop owners looking to leverage their customer base.
The merit of opening a store on Rakuten Ichiba lies in its overwhelming customer attraction power. While brand recognition plays an important role, the availability of Rakuten Points also holds significant influence.
The Rakuten Card, which earns Rakuten Points, has surpassed 25 million users. Many users who accumulate points use them on Rakuten Ichiba, contributing even more to their customer attraction power.
Despite the benefit of reaching an engaged audience and being a popular platform in Japan for sellers, Rakuten is reputedly more challenging to set up, unless you come prepared.
Even with the higher cost of operating a store, Rakuten offers merits that are hard to ignore.
Some of the key benefits of Rakuten include:
・ As one of the largest e-Commerce marketplace in Japan, Rakuten provides international merchants with the access to millions of new customers with their Cross Border e-Commerce program.
・ You can customize your storefront on Rakuten so you can ensure your store aligns with your brand identity and style.
・ Rakuten is all about making sure you get your buck. They have a weekly payout system so you can earn your money quickly.
・ Rakuten offers various programs you can use, such as “Shop Open Adviser” to make sure your journey is smooth sailing.
・ Their customer data system outshines the competition, and that’s what makes their targeted advertising so effective.
What is Amazon Japan?
Amazon Japan first entered Japan in 2000, selling mainly books. Amazon Marketplace became available in Japan in 2002. And by 2003, they were selling electronics, home and kitchen appliances.
Amazon became the most used eCommerce site in Japan in 2023.
For sellers looking to sell in Japan, Amazon is a more cost-friendly option when compared to platforms like Rakuten.
Opening up a shop on Amazon has the lowest barrier for entry for international sellers, because of their language support as well as their speed to market. In most cases, this can be accelerated when you already have a shop set up in your home market.
Amazon is also favored in rural areas as their distribution network excels, enabling customers to recieve their products quicker compared to Rakuten.
What is Yahoo! Shopping?
Yahoo! Shopping first opened in 1999.They are now owned by SoftBank who is driving acquisitions with Paypay and LINE.
As Softbank has heavily invested into Yahoo! Shopping and multiple acquired technology is being brought together, Yahoo! Shopping is showing early signs of having the potential to increase its market share in Japan. This makes it a hard to ignore, attractive platform to explore.
Some of the key benefits of Yahoo! Shopping include:
・ The biggest advantage of opening a store on Yahoo! Shopping is that there are no store fees or sales royalties. Although there are fees per transaction, they are about half of other EC sites, at around 6.74%.
・ Yahoo! Shopping has no restrictions on “external links,” which attracts a lot of sellers. You can send customers to external links such as social media, your own website, or other EC sites you might own (however, irrelevant links may be rejected).
・ PayPay is a mobile payment app that lets you make purchases using QR or barcode scanning features on your phone. If integrated, there is a potential to drive PayPay users to your Yahoo! Shopping store. Registered PayPay users has exceeded 60 million users in 5 years since the service launched. One in six cashless payments are now made with PayPay.
・ You can use LINE for messaging and even transactions, and it’s the second most popular app in Japan after Google Chrome. LINE utilizes a point system and has a massive customer database to potentially drive sales to your store.
Don’t Forget to Localize
So you don’t speak Japanese and you just want to start selling your products in your language?
Learn from other sellers’ mistakes and make sure to localize your products before your store goes live!
Japanese, like any other language, is a dynamic language. Localization is a way to speak directly to your target consumer and build trust with them.
Amazon does offer AI localization services, but the technology isn’t quite there yet. When localizing, you need a (native) professional who not only understands the language and its nuances, but knows the culture and consumer behaviors of the culture.
Start your journey in Japan the right way. We offer End-2-End services to help ensure your entry to Japan is smooth sailing so you can sit back and do what you do best. We support you from the beginning to the end as a partner, even with complicated and ever-changing regulations and compliance in Japan. And of course, we have a team to ensure your success in Japan by setting up your eCommerce store and localize your product to help you connect with your audience here.
You can also take advantage of our local warehouse so that your product gets to your Japanese customers fast and safely.