View of Osaka Tower and from Shinsekai district at dusk. Osaka, Japan
Japan is a densely populated nation of 126.8 million citizens, often touted as the mecca of technological innovation. (JP Morgan) It may come as a surprise that Japan has one of the lowest cross-border shopping rates at just over 10%. (Clickz.com) This untapped market has tremendous upside to those who understand how to localize their shopping experience to meet cultural expectations in this thriving digital market.
Japan’s tantalizing $177.5 billion ecommerce market is unlike any other. (JP Morgan) To break into this market, it is important to identify key distinctions in Japan’s ecommerce culture.
Any business looking to make inroads into Japan must master the country’s cultural norms and expectations for digital commerce experiences. Around 99% of Japan’s population only speaks Japanese, and content must be flawlessly presented to meet cultural norms. Merchants must invest in Japanese language websites and Japanese payment platforms that provide access to the Japanese yen and payment methods. eCommerce page layout and design must also be optimized for Japanese expectations. eCommerce sites in Japan look different from westernized sites and feature dense images and text with a high level of product details and information favored over whitespace.
Given the tremendous growth predicted in the Japanese market, companies need to consider how the Japanese make purchases and to understand popular payment methods in this island nation. Those that can integrate the right payments into their ecommerce experiences will benefit in this market.
Source: Rapyd Asia Pacific eCommerce and Payments Guide 2020
Japanese consumers use a wide breadth of payment methods which shows in their preferences. Ranging from credit cards to cash over the counter and beyond.
Payment methods in Japan are at a critical crossroads. There are trends emerging within the four major payment categories that are important to understand. Bank transfers still remain popular as do credit cards. However, recent changes in the popularity of cash over the counter and ewallets like Rakuten Pay and LinePay are worth noting.
Like their western counterparts, Japanese consumers are enamored with credit cards. Recent surveys show that credit cards serve as a preferred payment method for 57.6% of the population. (Rapyd)This is especially true online where 65% of ecommerce purchases are made with cards. (JP Morgan)
In many ways, a preference towards credit cards is a reflection of Japan’s age demographic. Both the older majority of the population and younger consumers have access to cards. This combined with the fact that people over the age of 40 are more likely to shop online explains why credit cards are frequently used. (VL Clank) As such, this Japanese payment method is here to stay.
Second only to credit cards, Japanese consumers are heavy users of cash over the counter for digital purchases. Rapyd’s own research noted that 11% of Japanese consumers rank it as their most preferred method. (Rapyd)
Cash accounts for 13% of ecommerce in Japan. (JP Morgan) Cash payment is not unique to Japan, but the preference of consumers in a highly developed financial market to use convenience stores to make cash payments for online transactions is distinctly Japanese. Japanese convenience stores such as Seven-Eleven, Lawson, FamilyMart are also hubs for cash payments in Japan, where customers can pay bills or top-up their mobile wallet balances. The sheer abundance of over 50,000 convenience stores in Japan further explains this phenomenon, as convenience stores are easy to reach in dense urban areas. (Japan Guide)
Society is continually moving towards digitization in Japan. The fastest emerging payment methods in Japan are PayPay, Rakuten, LinePay and other mobile wallets. (Tokyo Cheapo) Researchers found that nearly 21% of the Japanese population was using mobile payments in 2020, a number expected to rise to one in four by 2023 as QR code payment systems and the Japanese government’s cashless rebate program, which incentivizes consumers making cashless payments with cash back or points worth up to 5% of their transactions. (Emarketer). Considering the fact that these can account for billions of dollars in transactions, businesses need to offer popular digital wallets as payment options.
Bank accounts are a major staple in Japan. Today 98% of all Japanese citizens have bank accounts. (JP Morgan) The way that they use bank transfers varies from other cultures, however. In Japan, it is common to leverage bank transfers to pay companies directly rather than simply as a way of exchanging money with friends and family. With this unique distinction, bank transfers serve as an area of interest to those trying to do business with Japanese companies
It’s clear that companies around the world see tremendous potential in the Japanese ecommerce space. Supporting these methods will increase conversions and introduce new consumers to the international marketplace. Accepting popular payment methods will allow businesses to share in The Land of the Rising Sun’s ecommerce growth.
Sources:
Clank. https://www.vlcank.com/mr/report/090/2/.
Clickz.com. “A comprehensive guide to the Japanese ecommerce market.” Clickz.com, https://www.clickz.com/a-comprehensive-guide-to-the-japanese-ecommerce-market/260277/.
EMarketer. “Japan’s Cashless Vision Is Starting to Come to Fruition”https://www.emarketer.com/content/japan-s-cashless-vision-starting-come-fruition
Investopedia. “The Top 25 Economies in the World.” Investopedia.com, https://www.investopedia.com/insights/worlds-top-economies/.
Japan Guide. https://www.japan-guide.com/e/e2071.html.
JP Morgan. “E-commerce Payments Trends: Japan.” JPMorgan.com, https://www.jpmorgan.com/europe/merchant-services/insights/reports/japan.
JP Morgan. “2020 E-commerce Payments Trends Report: Japan.” jpmorgan.com, 2020, https://www.jpmorgan.com/merchant-services/insights/reports/Japan-2020. Accessed 2021.
Ministry of Economy, Trade and Industry of Japan. “METI Program Helps Municipalities Introduce Cashless Payment Services” https://www.meti.go.jp/english/press/2020/0427_003.html
Rapyd. “Asia Pacific eCommerce and Payments Guide 2020.” https://cdn2.hubspot.net/hubfs/5246303/Asia%20Pacific%20eCommerce%20and%20Payments%20Guide%202020.pdf.
Tokyo Cheapo. https://tokyocheapo.com/living/cashless-payment-apps-japan/.
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