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Japanese online retailing market led by Rakuten

Alex De Angelis

The Japanese online retailing market has been forecast to reach a value of at least $50 billion by 2015.

Online retailing is central to both the economising and the nesting trends. While Japan has one of the world's highest broadband penetration rates, it has lagged behind developed markets such as United Kingdom and the United States in the willingness of its consumers to shop online.

Many explanations have been advanced for this peculiarity: Japanese consumers love the physical shopping experience; mobile-phone screens are too small; the density of retail establishments means that online shopping has less of a convenience advantage; credit card penetration is low.

With the rise in the Smartphone and mobile internet penetration online retailers have started concentrating on expanding their mobile commerce platform. Consumer buying behaviour is changing as they enjoy the unique shopping experience using Smartphone apps.

Online retailers have begun attracting consumers by providing low prices, a free and quick delivery service, and gift coupons, among others.

According to a recent market report, 'Consumer Attitudes and Online Retail Dynamics in Japan, 2013,' in 2012, electronics represented the largest category group in the Japanese online retail market, with retail sales of JPY1,049.4 billion (29.5%), while food and grocery represented the fastest-growing product category, with a CAGR of 19.46%.

Demographics and changing consumer lifestyles play a pivotal role in the expansion of online retailing in Japan.

An aging population, shrinking household size, and an increase in the number of working women are factors driving online sales in Japan. The current demographics need convenience and enjoyment and many e-retailers are applying the concept of shopping with fun.

Rakuten Inc lead the market with a 26% value share in 2012. Rakuten Inc has established its status in the e-commerce industry and its sales posted a compound annual growth rate (CAGR) of 16% over the past five years.

In 2012, Rakuten Inc launched an e-book, Kobo, to gain access to the digital content market. Additionally, Rakuten Inc invested in social networking site venture, Pinterest, to promote Rakuten sales with a combination of SNS viral marketing.

For more information on the Japanese online retailing market, see the latest research: Japanese Online Retailing Market

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