A Closer Look at Japanese B2C and B2B eCommerce
Japan is one of the top 4 largest eCommerce markets in the world. It has been growing every year, especially during the start of the pandemic. With the convenience of online shopping, more and more people are buying and selling online. So, eCommerce is a great way to reach Japanese customers.
Both B2C and B2B markets are important for the Japanese economy. In B2C eCommerce was worth $178 million in 2019.
This article will explain B2C and B2B eCommerce markets in Japan including top industries, current trends, and future outlooks.
Short overview of B2C eCommerce in Japan
What is B2C eCommerce? B2C eCommerce refers to any eCommerce that is done between business and consumers. Amazon, Etsy, and Rakuten are examples of B2C.
Although Amazon is still popular, there are other larger platforms such as Rakuten in Japan. Rakuten is as popular as Amazon because of the number of merchants as well as the care able to create and customize a digital storefront.
Another popular marketplace is Yahoo! Shopping and PayPay Mall. Both are part of the Yahoo! Shopping network, and while PayPay Mall is new, it has a popular cashback rewards system.
For more B2C eCommerce websites that are popular in Japan, check out the article here.
What Does B2C eCommerce Look Like in Japan?
The Ministry of Economy, Trade, and Industry (METI) published a market research report on the 2020 eCommerce market in Japan in 2021. In the report, they should the increased growth of the marketplace due to lockdown as a result of COVID-19. However, the overall size of the B2C market has shrunk because of a decrease in the service industry, particularly in travel. This is the first time that the B2C marketplace had not seen an increase since METI started conducting these surveys.
The reports also found the top four categories were consumer electronics, clothing, food and beverage, and household goods. Together, they account they 73% of the total B2C eCommerce market.
Books & video/music software, consumer electronics, and household goods were the top industries with the highest share in eCommerce sales.
Logically, travel, food, beverage services, and ticket market sales have decreased significantly because of the pandemic.
Online games, worth almost 1,500 billion yen, accounts for a large portion of the eCommerce digital field. As more people spent more time at home, online gaming, video streaming, and music stream industries have grown
Although the B2C eCommerce market is growing in a variety of industries, the shares is lower than the shares in the US by the end of 2021. This might be due to Japan’s rate of adoption being low, but this just means that there is room to grow within B2C Japanese eCommerce.
What is B2B Ecommerce?
Definition
B2B eCommerce refers to a transaction between two businesses. So this can be between manufacturers and wholesalers, or wholesalers and retailers through online portal sales. B2B traction usually occurs in a supply chain where one company purchases raw materials in the manufacturing process.
By utilizing online sales, businesses can process orders quickly rather than by telephone, fax, and e-mail. Also, website traffic through search results and digital ads can help companies increase sales and gain new customers domestically and abroad. It is also beneficial since it can reduce the workload of receiving and processing orders and allows you to respond to inquiries quicker.
B2B eCommerce can also prevent any order and shipment mistakes due to human error. B2B eCommerce also allows consumers to check product information online and their orders. This reduces questions that can be asked by phone or email. Again, decreasing the overall workload.
Here are some real-life example of Japanese B2B eCommerce business:
Monotaro sells materials and tools to businesses for industries in manufacturing and construction. This is known as “Amazon of factories” in Japan. Before, it was time-consuming to catalog orders and negotiate with distributors for purchasing such materials.
Now companies like Monotaro have streamlined this distribution process. This has made it easier to purchase these products through e-commerce sites. This method is popular since companies can order an item with the possibility of same-day shipping and next-day delivery.
ASKUL sells office suppoles to busniess online. Before small and medium-sized businesses need to go directly to purchase these supplies, however, ASKUL eliminated this step. This makes the process faster.
current market & trends in B2B Ecommerce in Japan
The size of the B2B eCommerce market was 352,962 billion yen in 2019. While there was a slight drop in 2020 when the market fell to 334.9 trillion, the shares of eCommerce sales were 33.5% an increase of 1.8 points from the previous year.
One of the reasons for this growth is the increasing momentum for digital technology and operational efficiency. B2B has proved to increase efficiency and sales which can explain why businesses have used this method.
In 2020, manufacturing and wholesale industries had the highest shares of eCommerce sales. Oppositely, the construction, service, transportation, and information and communication industries had low shares in eCommerce.
The top industries that increased from 2019 to 2020 were retail, construction and real estate, other services, and information and communication. In terms of eCommerce sale shares, the top industries were transportation machinery, food products, and electrical and information-related equipment.
While the growth of B2C and B2B eCommerce decreased due to the pandemic, the sales shares have increased for both.
The market for B2B is 20 times larger than B2C and is expected to continue to grow.
Entering the Japanese eCommerce Market
The top industries that increased from 2019 to 2020 were retail, construction and real estate, other services, and information and communication. In terms of eCommerce sale shares, the top industries were transportation machinery, food products, and electrical and information-related equipment.
While the growth of B2C and B2B eCommerce decreased due to the pandemic, the sales shares have increased for both. The market for B2B is 20 times larger than B2C and is expected to continue to grow.
If you want to learn more about how to enter the Japanese market, click here.
