Updated: Jul 19, 2021
See What the Data Says
Contrary to popular Japanese belief, online purchases and ecommerce has been booming in Japan, and the speed of transition to digital has notched up a gear or two in recent years. The effect of the pandemic has also played a big part, dramatically increasing the need for easy shopping from the 'safety' of your home.
However, there are still so many business professionals and leaders in Japan who believe that flyers and newspaper advertising will bring them better results (albeit in some very rare cases, it may be feasible). We at AdVertize, a digital marketing agency in Tokyo, put our faith in data, so let's take a look at what the Japanese market looks like in terms of online buyer activity to confirm our hypothesis regarding the optimal method of advertising in Japan.
Digital Transformation is Booming
Although digital was already growing in Japan, the pandemic gave the population a boost in terms of getting used to buying products online.
In fact, it was announced by the Ministry of Internal Affairs and Communications that 50.9% of the total population bought items online during the month of October in 2020, compared to 42.1% in the previous year, resulting in 8.8% growth in usage.
Now, that means 1 of every 2 Japanese consumers has been using an ecommerce platform to make purchases, yet the majority of advertisers in Japan still choose offline as their main method of consumer communication.
Sounds like an opportunity right? Wait, it gets better...
The average money being spent during these shopping experiences has also increased dramatically, from an average of 12,967 yen to 17,876 yen per customer - that's a whopping 37.9% increase in spend.
The types of products that users purchase has also changed. Before it was mainly tickets and travel, whereas now, the following items are being sought after more (according to the growth rate of purchase volume):
Home Electronics: 77.6%
Automobile (and related products): 84% Reference: Ministry of Internal Affairs and Communications in Japan
So, with all of these changes, how is this impacting how you can actually "sell" to Japanese audiences? Glad you asked.
D2C is Finally Becoming a Priority for Japan
As you can see, a wide variety of products and industries saw huge growth in purchases coming from online, and this growth is set to continue even after the pandemic. Restricting the data basket to D2C industries, it is said that the Digital D2C market in Japan has reached around 2.2 trillion yen and will continue to grow to reach 3.06 trillion yen in 2025. Don't forget that this is only for the D2C market, and that there are many more market opportunities for other types of businesses in the digital ecosystem as well. For more on the expected growth in the Digital D2C market, take a look at the graph below:
Ecommerce Brands Are Taking the Lead
With 89.8% (2019) of the population being internet users in Japan, the objective of using the internet for these users provides great data in the user behavior for us digital marketers. Albeit the data being from 2019, here's the ranking of the websites with the highest traffic in Japan:
With Google leading the group (not a surprise considering it's a search engine), Amazon and Rakuten (popular Japanese ecommerce store) comes in close at the 2nd and 3rd spot, signifying the large demand for online shopping in Japan. As a side note, this is not to say that you should start your online store using these ecommerce platforms, as that's a whole different subject, but it clearly expresses that contrary to what many Japanese believe, there is certainly a large demand in buying items online. These numbers are projected to continue increasing with more user accounts being made everyday at a rapid pace in these websites.
And Japan's Elderly Population Is Actually Thriving Online
It's true that Japan is experiencing an aging population, and that they aren't as fast at adapting to the new methods of buying items online. However, this story also made a big turn with the pandemic. Take a look at the graph below:
(Ages: dark blue: 65+, yellow: 55~64, grey: 45~54, orange: 35~44, light blue: ~34)
The Ministry of Internal Affairs and Communications released this data which showed a drastic increase in the percentage of online shopping users for those over 65, accounting for around 30% of the whole age group. This is just the beginning, and with more users being introduced to ecommerce, this will continue to grow. As a side-note, look at the yellow line that shows the percentage for those between 55-64, nearly 60% of the population have used ecommerce!
We hope that this provides some insight on why we believe that digital marketing is the best solution for most advertising purposes. The blue ocean, or the gold mine that you miss out on is too large to ignore, and we don't want anyone to experience such a loss. If you'd like to learn more about digital in Japan, check out our top digital marketing blogs for Japan. For those who're looking for industry-leading digital services, feel free to contact us from the form below!