Japan B2C eCommerce
Japan is the world’s fourth-largest eCommerce retail market and the Japanese Business-to-Consumer (B2C) eCommerce market has been expanding rapidly. This presents significant opportunities for U.S. consumer goods companies to reach Japanese consumers directly and capitalize on the growing demand for high-quality, premium products. (Japanese consumers are willing to pay a premium for added value.) Entering the Japanese market through eCommerce channels presents a strategic opportunity to access Japan’s sophisticated consumer base and benefit from its well-established online shopping infrastructure.
Traditionally, U.S. companies have partnered with Japanese distributors who will import the goods, consolidate orders from retailers, place a single bulk order with the U.S. company, and help promote the brand and products through traditional marketing, advertising and more modern social media channels. However, Japanese distributors often take a cautious approach, carefully evaluating a brand’s potential before committing resources. Additionally, the recent depreciation of the Japanese yen against the U.S. dollar has increased the cost of U.S. imports, reducing distributors’ profit margins or forcing them to pass higher costs on to consumers, which adds risk for potential partners.
Japan’s B2C Market Overview
The Japanese Ministry of Economy, Trade and Industry (METI) estimated the B2C market at $176.8 billion in 2023, an increase of 9.2% from 2022. Despite this growth, online sales account for just 9.4% of total merchandise sales, indicating significant room for expansion. The top eCommerce sales products are food and beverages; home appliances, including personal computer-related products and accessories; apparel and fashion accessories; and household goods and furniture. Sales of these four categories total more than $77 billion, representing approximately 73% of the total B2C merchandise market.
Cross-border eCommerce Sales from the United States
Cross-border eCommerce allows U.S. companies to directly reach Japanese consumers without the need for a local distributor or physical presence in Japan. In 2023, Japanese consumers purchased nearly $3 billion in goods from U.S.-based websites. Selling through cross-border eCommerce platforms or directly via a U.S.-based website simplifies market entry by eliminating many complexities, such as navigating Japanese regulations and setting up physical operations. This model is particularly advantageous for small and medium-sized enterprises (SMEs) that may lack the resources to invest in a full-scale market entry strategy. Additionally, cross-border eCommerce allows U.S. companies to price their products in U.S. dollars, mitigating the impact of currency fluctuations and simplifying sales.
Partner with a Japanese eCommerce Seller or Service Provider
Partnering with a Japanese eCommerce seller or service provider can significantly reduce the logistical burden of selling in Japan by allowing U.S. companies to outsource inventory, order fulfillment, shipping, and customer service. Additionally, they can provide a fully localized shopping experience, including Japanese-language interfaces, customer support, and payment options tailored to Japanese consumers. This eliminates the need for U.S. companies to invest heavily in localization efforts. This partnership model enables faster market entry, minimizes risks, and provides flexibility to scale operations as demand grows. Local service providers often possess valuable insights into Japanese consumer preferences, shopping habits, and cultural nuances. By sharing this knowledge, they can help U.S. companies refine product offerings, optimize marketing strategies, and develop long-term plans for deeper market penetration.
Offering customer service in Japanese is crucial for building trust and delivering a positive shopping experience. Selling directly though Japanese eCommerce platforms or through a local service provider has the added benefit that customer service support will be in Japanese, which is critical for meeting the expectations of Japanese consumers. Japanese platforms and service providers can also manage reviews and feedback, responding promptly to maintain a good reputation on the platforms. This eliminates the need for U.S. companies to hire local staff or set up customer service operations in Japan.
Products sold on eCommerce channels in Japan have fewer reviews than products on U.S. ecommerce platforms, so it is easier for a new product to make an impact and help U.S. consumer goods companies enter the Japanese market more quickly. Even a few positive reviews will allow them to build credibility, gain sales momentum, and achieve a competitive edge more quickly and cost-effectively than in the U.S. market.
The return rate is relatively low in Japan, although not all sellers accept returns and exchanges. Japanese shoppers often research products thoroughly before making a purchase, reducing the likelihood of buying items that do not meet their expectations. They expect high-quality products and accurate descriptions and tend to be more deliberate and cautious in their purchasing decisions, which reduces the likelihood of returns. Numerous private market research reports indicate that the average return rate for eCommerce purchases in Japan is 6-7 percent. In comparison, the average return rate in the United States is nearly three times higher, at 17-19 percent, according to the National Retail Federation.
U.S. consumer goods companies interested in selling directly to Japanese consumers through eCommerce and seeking counseling and information on Japanese eCommerce service providers should contact U.S. Commercial Service Japan for further information and introductions at Office.Tokyo@trade.gov.