Is Amazon the Best E-Commerce Platform in Japan?

It goes without saying that over the past year and a half, when the world shut down, we all turned to online shopping in a way we never have before. The same goes for shoppers in Japan, who increased their e-commerce usage substantially during the Covid-19 pandemic.  In one year, the total number of online shoppers in Japan increased by 20%, while 35% more shoppers over the age of 65 years old began shopping online as well. All this to say the in 2020, the total amount spent online in Japan increased by a shocking 20%. So, what platforms are Japanese shoppers using to fulfill their online shopping needs?There are three major e-commerce platforms in Japan: Rakuten, the most veteran platform, founded in 1997, has accumulated a substantial following of 51.4 million active users in April 2020 and earned the equivalent of €29.6 billion in 2020. Yahoo Japan shopping began in 1999 and hasn’t built as great a customer base, but is 29.4 million users strong with a €6.76 billion revenue in 2020. Finally, Japanese online shoppers are turning to the newest platform of the three more than ever: Amazon. Started in Japan in 2000, Amazon Japan has the highest user base, with 52.5 million active users and a revenue of €25.8 billion in 2020. While Rakuten is still the leader in sales, Amazon has already accumulated more users and has established 21 fulfillment centers around Japan (compared to Rakuten’s 5) and is quickly preparing to surpass Rakuten for the overall top e-commerce position in Japan. For the remainder of this article, we will focus primarily on Rakuten and Amazon as the top two e-commerce competitors in Japan. When it comes to Amazon’s revenue, in 2020, Japan accounted for 5.3% of Amazon’s total revenue, which is behind Germany and the UK. However, Japan has a population of 126 million people, which is greater than these two countries, meaning it has major potential to only continue to grow its share of Amazon’s revenue in the future.

Japan E-Commerce User Experience

The active users vary from one platform to the next, which makes sense as the experience is different on Rakuten vs. Amazon and attracts different kinds of shoppers. Rakuten has more female customers while Amazon has more male shoppers, as well as a younger customer base. So what attracts these different demographics? The primary factor that draws shoppers in Japan to Rakuten over Amazon is the points program. There are many deals available on this site, offering points as a reward for different kinds of shopping behavior. It is very easy for shoppers to collect points on Rakuten and even easier to use them. Rakuten offers a variety of services from electricity to phone service and even cars. Shoppers can easily exchange their points for these items as well as using them like money to purchase more products.The Amazon product detail page is also very simple and self-explanatory. Shoppers can easily find all of the details about the product directly next to the product images and can add the product to their shopping cart in just one click without even having to scroll.  As far as pricing, Amazon is actually the cheapest option. While many more point program campaigns are offered through Rakuten, when it comes to price alone, Amazon wins by a landslide. When you evaluate the price of the same product on both sites (e.g. a woman’s necklace), it is 11,000 Yen (83.5€) on Rakuten and only 6,500 Yen (49.3€) on Amazon. It is likely that the major point deals on Rakuten are what attract female shoppers while the overall low prices attract younger shoppers to Amazon.

Is Amazon the Best?

So, keeping all of this in mind, we can finally ask: is Amazon the best e-commerce platform in Japan? In our opinion, Amazon has the most to offer its shoppers and is showing definite signs of growth in its only area of weakness, which is point systems. Amazon offers the simplest, most user-friendly shopping experience, the greatest prices and also lots of options for vendors and sellers to grow. Statistics show that online shoppers often don’t look beyond the first search results page. In fact, 70% of shoppers make a purchase from the first results page while 35% check only the first product and 65%, the first three products. This just emphasizes the importance of having  high-ranking products on Amazon as the A9 algorithm determines product visibility. Those who have optimized content, positive ratings and reviews and ultimately the best offering, will ultimately be placed in a position to win the sale. This works in favor of the vendors and sellers, but also the shoppers, by connecting them with the best, most relevant products early on in their shopping journey.  While Rakuten is still ahead of Amazon in terms of point programs, Amazon showed on Prime Day this year that they are not only willing to, but also actively making moves towards improving this reward system that is obviously very important to shoppers in Japan.