Starting a business in Japan?
Do you sell products that might be of interest to Japanese consumers or have a website that contains information relevant to a Japanese audience?
If you’ve been to Japan before, you’ve probably noticed that international brands are a big thing in Japan. While you may not build an empire the likes of Louis Vuitton overnight, the internet provides you with opportunities today to build brand name recognition from anywhere.
If you are thinking about starting your own business in Japan or targeting Japanese consumers, you may be on to something. However, there is no doubt that you will meet challenges along the way if you decide to jump in without doing any research.
Let’s take a look at some of the pros and cons of starting a business in Japan.
Why Target Japan?
As the third largest economy in the world behind the U.S. and China, Japan offers incredible potential as these trend-conscious people still cling to a great sense of materialism and are always looking for new shiny toys. Used cars are traded away to be sold abroad after a few years, only to be replace with a newer model.
If you are selling physical products, the fact that 45% of the Japanese population is concentrated in three major metropolitan areas, Tokyo, Osaka and Nagoya, allows you to fulfill and deliver your products in a timely manner. The country isn’t all that big–only about the size of the State of California, with a well-developed infrastructure and reliable shipping carrier.
What also helps is the fact that people are very trend-conscious and their decisions to buy are largely influenced by others. There are many brand-conscious Japanese–iPhone and luxury bags come to mind–and some people just want them because of the brand name or simply because their friends have them.
In 2016, 92% of the population used the internet and 80% of the total population shopped online–virtually everyone is online.
6th largest amount of smartphone users in the world (2017)
Globally the number of smartphone users is on the rise and Japan is no exception. In fact, the country ranks 6th in the word. If you think about the number of train commuters in Tokyo, Osaka and other urban areas, what do you think is the #1 activity a lot of people are engaged in during a long commute? It’s no longer reading books.
According to a 2015 survey, average commute time for working people in greater Tokyo is 1 hour 42 minutes a day. That’s a lot of time to kill every day, isn’t it? With long and grueling work hours, company workers are constantly pressed for time. Many people turn to their devices to take their mind off of their work. This creates opportunities for content creators and eCommerce sites to directly reach the consumer and perhaps make their commute just a little bit more enjoyable.
Ecommerce is Booming
As the world’s fourth largest eCommerce market, Japan’s ecommerce market is expected to continue to grow.
Number of online shoppers in Japan (Millions)
While big e-commerce sites like Amazon Japan, Rakuten, Yahoo! Shopping dominate the market, there are also plenty of niche sites.
Changing Consumer Buying Habits
Japan may be known as one of the most expensive countries around the world. But consumers’ spending habits have changed over the years as a result of the economic downturn during the late 2000s. While it is still true that people want luxury items and place value on quality, we live in a different era where younger people are more price conscious and like to hunt for bargains online.
Social Media Landscape in Japan
Most social media sites that are popular worldwide are just as popular in Japan, but there are some differences.
In Japan Facebook is used more for professional purposes rather than social and the growth is slow. It is more popular among males over 30.
Source: humble bunny
There are a lot more Twitter users among all age groups because people can remain anonymous and they can also follow celebrities, their favorite brands while keeping up with breaking news, traffic, weather etc. Instagram is also growing fast, especially among young females.
What You Need to Know about Japanese Consumers
So far, We’ve only talked about only the good things, but the biggest challenge is most likely the language.
Local language is always a challenge–unless you are targeting Japanese consumers who are comfortable doing everything in English, but you percentage of the population who fit that demographic is quite small.
Therefore, you’ll need to do more than just translate into Japanese. You will need a translator who understands the intent of the original language as well as the cultural nuances of Japanese. Often times, a translator may need to rewrite sentences completely because often what makes sense in English doesn’t make sense in Japanese at all.
The Japanese language has many more variations when it comes to formalities than English. If you merely translate word for word, it would sound stilted, funny, and strange indeed. If your website copy looks as if it were Google translated, it will be difficult to earn trust from visitors. If you want to understand Japanese consumer behavior you have to understand the language.
Expectation of High-quality Customer Service
Besides the language issue, if you’ve visited Japan before, you know quality of customer service is very high. Service is generally good anywhere you go–even at a convenience store or your average restaurant.
- At restaurants the food arrives at the table fast, and trains always arrive on time. A lot of people are used to this and probably take it for granted.
- Some people may be worried about packaging, a damaged product, customer service or items taking too long to arrive.
- Also, many people are worried about giving credit card information to an unknown company in a different country.
Whatever the case may be, language issues and cultural differences are a big hurdle for many Japanese.
How Do You Get Japanese Consumers to Trust You?
Many Japanese people are not used to buying something from stores overseas and handling things in English. They are often scared by the prospect.
A study by eCommerce Foundation reveals that 26% of shoppers are hesitant to buy from overseas stores because of the language. Also, 23% does not trust foreign sites. However, the research also shows that 20% of shoppers have purchased clothes and shoes from oversea stores at least once in the past because of better availability. Japanese consumer culture is basically risk averse and Japanese tend not to buy from overseas stores.
At the end of the day it just comes down to whether you can:
- Build trust – use everyday language and the right tone
- Create and offer value (Create something not offered elsewhere)
In a perfect world you want to sell something nobody else offers, but that is not always possible. You may want to come up with ideas such as free gifts with a purchase or something that entices consumers.
As it is elsewhere, customer reviews can really make a big difference. When people see what other shoppers are saying about you, they are more likely to trust you.
Japanese consumers are hesitant to purchase goods online from overseas companies. Also, marketing to the Japanese in English is a moot point.
You need to localize your English content into natural Japanese for which you need native Japanese translators who are skilled in cultural sensitivity. What makes sense to an English speaking audience will not necessarily work well with Japanese customers and vice versa. Thus, you have to make sure your Japanese translator understands both worlds.
You need to earn the trust of the Japanese consumer and a lack of social exposure will only hamper work against you. You’ll need people talking about you on social media, and positive reviews. You can achieve this by meeting and delivering the high quality service that Japanese consumers expect. You could also run campaigns on your Japanese social media channels, organizing contests which will improve user engagement and foster lead generation.
Finally, when we say localize we mean localize. Make sure you have a registered address in Japan as Japanese are risk averse and do not like the prospect of having to deal with an overseas company in case something goes wrong with the order.
Are you ready for your Japanese adventure?