An In-Depth Look at Japan’s Performance Marketing Trends
Abby Long is the Senior Managing Editor at PMG.
In this month’s piece on global market trends, we’ve set our sights on exploring the rich historic culture and progressive economic and consumer trends of the third largest economy in the world, Japan. With the country’s unique position as the only Asian nation of G7, Japan’s sophisticated global economic influence is backed by a strong middle-class consumer base and well-established tech and manufacturing-related supply chain; making it one of the most fascinating markets we’ve dove into.
Due to the global financial collapse of 2008 and then the unfortunate series of natural disasters in 2011, the 9.1 magnitude earthquake causing a tsunami that led to a nuclear disaster, greatly affected the economic stability and nation’s psyche. But now, Japan’s somewhat stagnant economic climate is trying to turn a new leaf.
Because the newly-elected Prime Minister Shinzo Abe declared the nation’s economy as his top priority, Japan is slowly but surely benefiting from looser monetary policies and an economic revitalization that is boosting the economy while working towards lowering the Japan government’s debt.
Other economic challenges include,
A rapidly-aging and shrinking population. With more young people focusing on their careers more so than starting families, some researchers predict that the population of Japan will decrease by as much as a third by 2060, paired with the share of citizens over the age of 65 rising from 27% (today) to 40% (by 2060).
These types of multifaceted challenges have transformed into new opportunities across a variety of industries including retail, tech and travel. Coupled with an internet penetration of over 93% of the Japanese population and over half of all media being consumed online, the ways to connect and turn people into brand advocates are more plentiful than ever.
But before you jump into Japan – there are a few best practices to keep in mind.
With the second-highest GDP in the APAC region, Japanese consumers are smart, sophisticated and very tech-friendly. In fact, Japan is the world’s third-largest E-Commerce market in the world — accounting for over three percent of the total GDP as over 77 million people (70%) regularly shopping online.
Combined with the market’s highly urban population, one shared language, well-developed distribution infrastructure and small country size, Japanese retailers benefit from easy shopping and delivery methods; making E-Commerce one of Japan’s fastest growing markets. And to no surprise, Japan’s retail industry has thrived because of early tech adoption and habits by Japanese consumers.
Just as Japan is known for the sophistication and exquisite detail of its cuisine, as is expected in the digital space from brands by consumers. Upon looking across industries and platforms, a common expectation from consumers outshines other purchase considerations — the more detail about the product or service, the better.
Other top consumer needs in Japan include,
Product-specific and merchant (brand) credibility and rankings. The product details and the brand story should answer these types of questions: Have I heard of this brand before? If so, where? Is this product rated highly by previous buyers? Has the product won any notable consumer awards or been endorsed by local talent or famous celebrities?
Trustworthy Website & UI. The design, layout and product details should answer these types of questions: Can this site be trusted? Does it provide detailed information about the product or services being considered? Are the pictures eye-catching and of high-quality?
Personal Interest and user benefits. The policies and product information should answer these types of questions: Is this a fair price for this product? Does this brand offer free shipping? What’s the company’s returns policy? When will it be delivered by?
Speak to the consumer in the local language. Localized copy and assets is a must for brands trying to penetrate this market. It is crucial to understand the Japanese language in order to keep a positive brand perception in the country.
Identify the market’s purchasing habits. Beyond this tactic, marketers must realize the holiday calendar in Japan differs from that in the United States. For instance, Spring is a holiday where the cherry blossoms bloom and bonuses are to be had. While this is an uncommon time to spend in America, in Japan, it is a time of purchase and prosperity. Successful brands must understand the market and consumer buying habits globally.
Understand the best place to market your brand online. The three most popular platforms accounted for 40% of the total e-commerce market share in 2014 and now make up almost 50% of the share. In other words, the Japanese E-Commerce market is dominated by Amazon, Rakuten and Yahoo! Japan (and only growing stronger).
With such a growing E-Commerce landscape in Japan, Amazon continuously benefits from online growth. Globally, Japan has the 2nd largest foreign presence on Amazon. Retail news reported that because Amazon Japan has set itself up for success by investing in its own distribution network, making 2-day shipping seemingly simple has greatly benefited the organization. Japan is no different than the global market when it comes to craving convenience. Amazon has placed itself in a position of growth by providing a diverse range of products to the consumer, all in a timely manner. As Amazon benefits from the country’s growing online landscape, other retailers will also rise.
Once Japan’s most popular, Rakuten has recently started to lose its top spot to Amazon. However, Rakuten still holds relevance in the online marketplace. In fact, Rakuten has access to over 90% of the Japanese population.
This online E-Commerce giant sells a plethora of products, including food, clothing, electronics and other categories. Similar to Amazon Prime, Rakuten has a loyalty program to keep shoppers coming back. In other words, the more you buy, the more you get, so consumers who shop on Rakuten remain loyal. This platform is also a place for individual sellers to create their own “mini website,” so there is a higher brand discovery opportunity. Rakuten, while maybe losing to Amazon, is still an online powerhouse that should be utilized.
Amazon and Rakuten provide similar services to small and large sellers alike. Until recently, Rakuten held the majority market share online, but as Amazon continues to show its strength as an E-Commerce giant by disrupting the global norm, we expect to see a shift in Rakuten shopper’s loyalty within the next few years. Utilizing these two platforms is crucial to establishing and maintaining success for any brand. However, E-Commerce is only one piece of the performance pie.
In comparison to its APAC neighbors, Japan has the greatest adoption of global search engines. As can be seen in the chart above, Google and Yahoo! are used for over 80% of all searches with Bing at 4% and Baidu, DuckDuckGo and Naver capturing less than 1% of the search engine market. Because Google and Yahoo are valuable for different uses, it’s recommended to have an active presence on both search engines.
The use cases between Yahoo! Japan and Google Japan are noticeable when compared side-by-side. Because Yahoo! Japan displays news, useful widgets and the local weather for users to consume first, it’s primarily used for information gathering rather than searching with intent. Whereas Google Japan strategically uses whitespace to encourage users to search first, then consume.
Since Google Japan and Yahoo! Japan are valuable for different uses, it’s recommended to have an active presence on both search engines.
To dive even further into searcher’s intent across search engines, according to a consumer search behavior study by Google, Yahoo! Japan is mostly used for habitual searches like weather and news while Google Japan is reserved for more “want to know” and “want to buy” searches.
To meet these needs, a few optimization strategies are recommended,
Localize site design and product copy descriptions. Shoppers in Japan require a great deal of assurance before making any decision, especially online. Because of this, successful brands have strategically provided detailed descriptions and lengthy specifications for each product offering. As highlighted in the comparative analysis of Yahoo! Japan and Google Japan, densely-packed text is valuable to shoppers.
Capturing shoppers attention with bright colors. As can be seen in imagery and entertainment like anime, pop music and movies originating from Japan, online shoppers are drawn to bright colors, creative uses of color and high-quality images. Be sure to use only the highest-quality images of your products or brand when advertising to Japan shoppers online.
Display reviews. A great deal of trust is put into customer reviews. As Japan is globally renowned for the quality of their customer service across verticals, Japanese shoppers have high expectations for the quality of information provided to them by a merchant and the ease in which it can be accessed, especially online. When possible, it’s best practice to not only provide detailed descriptions but highlight previous customers’ experiences with a product.
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As the modernity of the island nation’s high-tech advancements combined with its traditional heritage established Japan as a respected global market, we believe a key differentiator is the Japanese people’s excitement and willingness to embrace new tech and adopt modern fashion and trends. As Japan is set to host the Rugby World Cup next year and the Olympic and Paralympic Games in 2020, now is an opportune time for brands to consider entering and establishing a presence in Japan.