The Japanese market is a potentially lucrative one for UK brands expanding into etail, but there are particular expectations and customs retailers should be aware of
As volatility rocked European economies following the Brexit referendum vote on 23 June, on the other side of the globe, the Japanese electorate delivered a resounding endorsement of the stability afforded by the economic policies of its prime minister, Shinzo Abe.
Winning a “supermajority” in the election of July 10 on the back of his “Abenomics” policies and pledge of a further ¥10trillion ($100bn) of fiscal stimulus, the Japanese prime minister appears to have a steady hand on the tiller in a market that has been growing swiftly.
UK retailers must look at how to maximise any opportunities presented by current market circumstances and get the most out of Japan’s prosperous economy in the face of Brexit unknowns. Launching in a new territory can be a daunting proposition, but there are useful lessons to be learned from those who have done so already.
One way to assess potential success is to open an online store. Government body UK Trade and Investment (UKTI), reports that Japanese ecommerce totalled $86bn (£66.4bn) in 2015, and predicts the market will grow to $122bn (£94bn) by 2018.
Ettinger London CEO Robert Ettinger
Robert Ettinger, CEO of luxury leather goods brand Ettinger London – which operates Japanese website ettinger.jp – says: “As the pound is much weaker now, there is more incentive for the Japanese to buy. It is, in fact, helping our sales there.”
With a GDP of $4.77 trillion (£3.6 trillion), Japan has the third-largest economy in the world, following the US and China, and is home to 1.9 million high net worth individuals – those with at least $1m (£770,000) in investable money.
UKTI reports that around 90% of Japan’s population is connected to the internet, and ecommerce is the fastest-growing retail channel at the moment. Furthermore, UKTI figures indicate that the country had 77 million online shoppers in 2015. With
its established ecommerce market and almost
2 million dollar “millionaires”, Japan clearly has money to spend. Beyond this, the stable Japanese economy could provide UK brands with a strategic stepping stone to other Asian markets
A survey of 1,008 Japanese shoppers by logistics company WNDirect found that “one in 10 who have shopped online for clothing did so with an international brand or website within the last one to three months” (box, right). The Japanese consumer is evidently interested in new trends and products, including those from the UK. Ettinger’s ecommerce site, which has been running since 2008, has nearly doubled its sales in the last three years. Other UK brands that sell successfully online in Japan include Monsoon Accessorize, Paul Smith and Burberry.
However, Chris Vincent, Asia-Pacific region CEO of retail consultancy Practicology, warns: “The Japanese market is very parochial. You have to have a high degree of localisation to succeed.” Chief concerns given in response to WNDirect’s survey include assurances in relation to returns, making ordering simple and having multiple delivery options. These considerations may make trading in Japan more difficult for UK brands.
To begin the ecommerce expansion process in Japan, you must ask the right questions, says Martin Newman, Practicology’s global CEO: “Are any of your competitors sold in Japan? How is similar merchandise selling there?” He also recommends observing how many Japanese customers come into your store or stores to gauge demand.
Once those questions have been answered and a decision to press go has been decided, the main considerations to focus on are the scope of product, the size curve and fit, as well as local nuances.
“The tastes of the Japanese customer are different,” says Vincent. “Content needs to be localised” and imagery needs to be tailored to increase its appeal.
Language is another factor, he adds: “Only 1.5% of Japanese people speak English. So you must have total language translations on the site.”
Physically, while running a Japanese ecommerce site from the UK is possible, it can be beneficial to have a local partner, Newman advises: “Local agencies are hard to control remotely, but that may benefit you. You have to think end to end about the whole business from communication, to logistics, to customer service, and have someone on your team who knows the local language and really understands the market.”
Ettinger began its ecommerce business in Japan using an etail site that the company ran from the UK. It quickly realised that because of the language barrier, and the need for quick delivery and quality control, the only way to succeed was to run it from Japan, so it started a partnership with Japanese firm Kandy. Ettinger recommends visiting the country, meeting people and working with the British embassy in Tokyo to get set-up advice.
Japan is a gift-giving culture. So you must have a gift-wrapping option on your site
Chris Vincent, Asia-Pacific CEO, Practicology
UKTI points out that marketing elements in Japan differ, too. To promote a business, brands must realise that, in Japan, Yahoo has a greater presence than Google and Instagram is more popular than Facebook. Customer chat engagement happens mostly through Facebook chat and Line, an instant messaging app similar to Whatsapp.
Japan, Vincent says, is a “gift-giving culture. So you must have a gift-wrapping option on your site, too.” He adds: “The logistics in the Japanese market are very mature. The expectation is no more than two days to receive a parcel. Customers still have the option to pay cash on delivery and at pick-up points in convenience stores.” WNDirect found in its survey that 72% of Japanese customers prefer to have their purchases delivered to their home, while collecting from a store appeals to 12%.
“Product is very important. You have to make sure that yours are 110% the best,” says Ettinger. When products must be returned, the Japanese customer is a cautious one. WNDirect found that 46% of respondents will only purchase from a store with a straightforward returns policy and 26% will shop only with an online retailer who offers free returns.
More than half of the internet users in Japan (54%) use their mobile phones to get online, and UKTI reports “mobile is twice as popular as desktop for online purchases”. All underground public transport in the country has wi-fi, so shoppers can buy online even on their daily commute.
Vincent says: “The ability to work and play on that medium is so important, so you must have a good, optimised mobile offering.” As he concludes, “The main point to understand is the Japanese customer needs to trust you. So whatever you do, make it feel like a local experience.” And that’s how to click into the world of Japanese ecommerce.
International logistics company WNDirect surveyed more than 1,000 Japanese online shoppers. One in ten had purchased clothing from an international brand or website within the past three months. Other findings included*:
If they do actively seek an international brand, most respondents favour retailers the USA (63%) or UK (29%). The five most popular locations worldwide are:
1. USA (63%)
2. UK (29%)
3. France (26%)
4. Italy (17%)
5. Canada (12%)
When shopping on an international site for clothing, respondents say that their main concerns relate to returns, ordering and guarantees. They are most likely to seek assurances in the following areas:
1. Returns policy (44%)
2. Simple ordering (38%)
3. Guarantees (37%)
4. Shipping options (35%)
5. Customer reviews (30%)
In terms of delivery of their purchases, respondents say that the most important considerations are:
Cost of delivery (87%)
Time it will take to receive the parcel (37%)
Good return options (35%)
When Japanese shoppers need to return an item of clothing that they purchased online, wnDirect’s research reveals that their favoured methods are as follows:
Courier collecting from home (49%)
Return to a post office/local depot (21%)
Local convenience store (19%)
*Respondents could select multiple options in response to some questions