What the U.S. Can Learn from Japan's eCommerce Ecosystem

From eMoney to mobile money, it can be argued that Japanese consumers embrace and adopt new payments technologies much more quickly than the American public.

Not only has Japan has cracked the chicken-and-egg problem for mobile payments, but most eMoney systems in the country already offer mobile, electronic and plastic card payment forms. (Related Article: Can the U.S. Replicate Japan's Mobile Payments Success?)

What lessons can U.S. payments professionals learn from looking at Japan's eCommerce and mCommerce landscapes? For one perspective, PYMNTS.com turned to Abasa Phillips, formerly NEOVIA Financial PLC's Country Manager for Japan and now an online marketing consultant for Sukkiri Corporation.

PYMNTS.com: How would you describe the state of eCommerce in Japan?

Abasa Phillips: eCommerce is alive and well in Japan. Japanese consumers have now become quite accustomed to purchasing products online, even from overseas eCommerce sites as long as it has been properly localized.

Domestically, Amazon Japan and Rakuten are quite powerful. Rakuten is comparable to an online mall and has over 35,000 online shops within its site.

PYMNTS:  What is the business model for the most successful players and how is that different from other parts of the world, if at all?

Phillips: If you wander in to a brick-and-mortar retailer here in Japan, one of the first things you will notice is that the displays, signage, arrangement and layout of products is quite different from what you will see in the West. Products are often times lined up by color and size, and there are typically large variations of the same type of product. Colorful signs and a constant barrage of loud announcements indicating sales and specials are the norm here.

Online shops are no different. They tend to be visually gaudy, and products can sometimes be arranged by not only type but color. This is quite useful when searching for a red cardigan to wear at the company Christmas party.

Most large eCommerce sites build a lighter, yet gaudy, Rakuten site and use Rakuten's payment system.

PYMNTS: What are some of the challenges unique to eCommerce innovation in Japan, and how does one overcome them?

Phillips: The female high-school student is a highly-coveted consumer demographic here. In order to capture this market, having both mobile-friendly eCommerce sites and offering cash-based payment methods are a must.

In addition, Japanese consumers are extremely trendy, and eCommerce retailers sometimes struggle to keep up. For example, there is a new Sanyo home bread maker, the Gopan, which allows you to make bread from rice. Online and offline buzz hit a maximum, and now, the Gopan bread maker is backordered by four months.

PYMNTS:  What's next in payments innovation in Japan?

Phillips: Payment norms in Japan are very different from anywhere else in the world. They have embraced eMoney unlike any other market that I know of. Most of the population uses eMoney on a daily basis with mobile FeliCa RFID wallet phones to purchase train/bus fare, a beverage at a vending machine, a meal at a local restaurant or a snack at a convenience store. Many local business and convenience stores have their own chargeable eMoney cards as well as loyalty cards.

We have been experiencing a boom here for the past couple of years that shows no sign of waning. Since it is inconvenient to carry a wallet, a company called Hashy Top-in developed an Edy rechargeable eMoney wristband that looks like a watch (and, of course, comes in five different colors) that can be charged at convenience stores and used almost anywhere.

Regarding eCommerce, most domestic eCommerce sites offer convenience store payments, where customers can pay for products at their local convenience store. Online banking/ATM payments are also quite popular.


 

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New forms of alternative credit and point-of-sale (POS) lending options like ‘buy now, pay later’ (BNPL) leverage the growing influence of payments choice on customer loyalty. Nearly 60 percent of consumers say such digital options now influence where and how they shop—especially touchless payments and robust, well-crafted ecommerce checkouts—so, merchants have a clear mandate: understand what has changed and adjust accordingly. Join PYMNTS CEO Karen Webster together with PayPal’s Greg Lisiewski, BigCommerce’s Mark Rosales, and Adore Me’s Camille Kress as they spotlight key findings from the new PYMNTS-PayPal study, “How We Shop” and map out faster, better pathways to a stronger recovery.

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