This post will provide general issues faced in the Japan e-commerce market and logistic aspects. Lastly, I will also discuss a bit about the recent e-commerce related movements and trends, which has not been fully captured by the stats yet.
Issues
The wording here may be confusing to most audience. By trouble, I mean any issues occurred throughout the entire online shopping experience, from going to the site, ordering, receiving, calling the service centre and return. Overall, Japan has the least reported trouble rate among the top three major e-commerce markets. Some may speculate that the Japanese culture is extremely humble, thus many troubles may not have been reported leading to the lower number. On the contrary, Japan has a ridiculously high standard towards the quality of goods and services, any small mistakes would be reported by the customers and the merchant would need to compensate the customers.
The top issues identified are in the above shown order. Delayed delivery is one of the most often complained issue. Please keep in mind that Japan offers one of the best logistic infrastructure and service. Even with the degree of delayed delivery, we may be talking about at most 2-3 days as oppose to 1-2 weeks in other markets. Secondly, while broken delivery is quite common in all markets, fake goods also exist in Japan. This issue is in line with customers risking themselves by shopping at individual operated sites for lower prices. The rest of the top issues are commonly known even in different markets.
B2C Logistics
The B2C logistic volume has grown steadily in the past three years. The higher growth rate in truck transportation categories suggests more medium to large parcels and bulky goods such as furniture are transported, leading to higher volume growth in monetary term.
The B2C logistic market is extremely mature and saturated. It is almost a good case for duopoly. In the previous figure, though the mail postage volume is the highest, they are not entirely covered by Japan Post. Yamato and Sagawa offer a wider range of fulfilment service than Japan Post does. The only advantage that Japan Post has over other service is the complete deliverable coverage throughout the nation. Due to the near duopoly situation, the service and price offering don’t actually differ much between Yamato and Sagawa. Merchants often choose vendors based on price points since the service level are more or less equal. Japan Post is only used by merchants for lower cost reason or remote area delivery.
It is worth noting that in some case, merchants can work with the logistics vendors to integrate additional service offer such as furniture assembly or bulky item recycle.
Recent development
SNS fad
Japan market is a "successful” late adapter of the SNS boom. The introduction of Twitter and Facebook even wiped out the local grown service called mixi. Companies and brands have been fed by all the legendary SNS successful stories from the west, and tried to replicate them in this market. None has been able to increase customer satisfaction or generate sales from the SNS sources. In 2013, there has been a less focus on utilising SNS as a marketing tool, even despite the sudden increase in popularity of cute sticker centric Line app.
Mobile sites/apps
The trend of “mobile first” has been led by Facebook and Google from 2013. More and more brand sites are making their sites to be smartphone capable. This is a necessary step for brands as Japanese use smartphone for just about anything and everything. They also spend more time surfing the web using smartphone than using PC. Unfortunately mobile site designs are still in the infancy stage. Consumers struggle to find complete product info via the mobile sites. What differentiate mobile use case from the PC is that if the user is intrigued even by the incomplete info from the mobile site, they are assumed mobile already and may likely to the take action to find the stores nearby to check out the products or services right away.
Some brands feel that mobile sites is not attractive or invasive enough, they create apps instead to “claim" their real estate in users’ smartphone space. This approach comparing to mobile site, is very successful, but conversion is nearly impossible from the apps due to high transaction costs burdened by the merchants. All in all, the development of the mobile apps and marketing are very lagged behind relative to western markets despite the longer history and higher penetration of mobile device usage in Japan.
O2O
This is one of the hottest term rising from the second half of 2013. Whether you read it as “online to offline” or “offline to online”, you have to treat it as a mutual traffic directions. Sentimentally, the brands that own physical stores want to redirect customers from online to offline. This is because in recent years, online stores have rapidly grown and the physical stores have observed a steady decrease in revenues and average basket values. It is not hard to put the two dots together. Overall, retail brands are growing bigger in the pie size. It is mostly because the internal HR evaluation do not update to reflect the market change, which often lead to internal conflict between the online and offline businesses. From customers’ point of view, they both represent equally, as long as the customers can get what they want via either channel.
On the contrary, Japanese retailers can easily drive their offline customers to online and allow further interactions with the customer regardless the eventual conversion location. As the head of MUJI web business division once said, “the time spent with customer” is an important KPI in branding success.
O2O is still in the infancy stage for most Asian retailers. US department has begun to combine all of their channels to provide a consistent experience for the customers. Customer data is linked across each channel to better understand customers’ interactions with each property of the brand. For Japanese retailers, they create online channels because everyone else is doing so, yet only a handful has a broad view of the entire marketing strategy for all channels.
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