The Global Retail Insights Network (GRIN) and btrax held their first joint Leadership Lab in Tokyo last week, with conversations spanning the gamut of Japanese ecommerce. One main takeaway is that developing a foundational business in Japan can be a beachhead for business in Asia with long-term returns.
“The Japanese consumer is very loyal, and there are several hidden surprises about the business here that can lead to higher profit margins,” said Yuki Kurihara, Strategic Planning Director for NIKE Japan. “Some of the benefits include incredibly low return rates. You would think for shoes the return rates would be extremely high, but we have found that Japanese consumers have a very good idea of their foot size and are much more precise in their ordering habits than any of their international counterparts.”
A recurring theme throughout the session was that brands that do enter Japan often miss the mark when it comes to truly understanding the Japanese consumer, who expects excellent customer service and lives in a mobile ecommerce environment.
“We think of mobile first and last for Japan” said Sei Sasaki, Web Coordinator for Marc Jacobs Japan. “Japan leads the world in the percentage of ecommerce transactions on mobile sites at 49%. When you factor in the emerging generation of shoppers, within the next 5 years over 80% of all ecommerce will be done on the mobile phone.”
According to research by Hakuhodo DY that explores Japanese media usage, mobile usage overtook PC in Japan in 2014. The rate of growth radically outpaces any other country in mobile ecommerce purchases, especially when you factor in that almost all mobile purchases are on the mobile phone –not a tablet. The only other comparable country to this level of mobile interest is South Korea. (In comparison, the US still sees half of mobile ecommerce transactions completed via tablet.)
“The key for us in Japan has always been to understand how our value proposition is different,” said Kai Li, VP of International for the Los Angeles-based Revolve Clothing. “In Japan, our selection and ability to perform a high level of service are key.”
“Ultimately the biggest challenge for companies to do business in Japan is similar to other countries, in that it is extremely challenging to understand the business from afar,” noted Brandon Hill from btrax, a company that assists brands entering into the Japanese market. “It takes local expertise and knowledge of how the market is moving to ensure your brand value is understood. You need to ensure that you’re focusing on the same pieces of the puzzle that your consumer cares about – delivery, payment, and customer service.”