Tokyo calling: Tips on expanding to Japan

When Australian retailers decide to take their business overseas, it is common to see them first testing out a market somewhat similar to our own – New Zealand, the US or the UK to name a few.

However, political instability in these regions has thrown a spanner in the works for expanding businesses. The ongoing issues of Britain’s exit from the European Union and the rocky US trade situation have led China to raise concerns regarding the ability to get stock in and out.

There are expansion opportunities closer to home, such as Japan.

According to Shopify’s country manager for Japan, Mark Wang, the country’s e-commerce spend reaches $120 billion a year, providing a sizeable opportunity for retailers.

On average, 95 per cent of people in Japan use the internet every day, with 70 to 80 per cent of the population having shopped online – across all generations.

“It’s a massive market,” Wang said at the Shopify Commerce+ event. “No matter your product, there is a customer you can tap into in Japan.”

Such an expansion cannot be a simple copy-and-paste of a retailer’s Australian operations: if a retailer is to enter the market, it must do it on the market’s terms.

According to Wang, the first step to entering the Japanese market is understanding the nation and its customers.

“Japan is a very protective ecosystem,” Wang said, “an antiquated market that has not evolved in 10 or 15 years.”

Dominated by domestic marketplace platforms for quite some time, Amazon Japan has only recently started disrupting the way that the e-commerce industry functions there.

Additionally, the Japanese consumer’s expectations are completely different to those in Australia. For example, as a culture, the Japanese will consume far more information about a product before they will purchase. A Japanese online product page is far longer than in Australia and would typically turn people off if it was presented to an Australian audience.

Due to this, they are less likely to impulse buy, but will actively seek out all available marketing about a product prior to purchase.

“They are very receptive to marketing,” Wang explained. “They want to see it; they might not act on it right away but [advertising is] everywhere you go.”

While Japanese consumers may be slow to purchase an item, he added, once they perceive the value in the item, they will often be more than happy to pay more than what it may actually be worth – with watermelons selling for more than $300 in some places.

This decision to purchase comes with delivery expectations far beyond the typical Australian consumer – Japanese shoppers are accustomed to selecting the date and time of delivery, starting from the afternoon the purchase is made.

It was this expectation around delivery that drove mattress online retailer Koala to invest in a localised supply chain, according to Koala’s head of international Jeremy Dufner.

“I think the two things that we looked at when we were localising the business were experience and viability,” Dufner said.

“There’s a lot of care given to the delivery experience in Japan, and just the general customer experience, so we wanted to make sure that that touch-point with the customer was solid.

“I think relying on the local network, especially given the physical size of our product, helped us guarantee the box would arrive in good condition and that the overall experience would be at the level the Japanese consumer would expect.”

It isn’t enough just to get the product in the market though, according to Dufner, who notes Koala is currently in the process of localising the product itself for local tastes – initially having altered the level of firmness of the mattress, and now looking into further localisation.

“The next round, we’re going to be changing around the mattress cover. Australians wash a mattress cover maybe once a year – so they say – whereas in Japan people are washing our cover every month, if not more often,” Dufner explained.

Leathergoods retailer Maison de Sabré offers next-day shipping from Australia, having made the decision to expand to Japan after realising there were “about 25 to 30 resellers our product because we didn’t have a localised website at the time”, according to co-founder Oman Sabré.

The business, which sells clutches, card holders and phone cases, has tapped into the propensity of Japanese consumers to create user-generated content of its brand.

“People will take photos, they will video the unboxing process and take photos of the product, and go to their favourite cafe just to photograph it,” Sabré said. “We’ve been fortunate.”

The expansion hasn’t been all roses, Sabré said, with the general speed of business in Japan having caused some frustration within Maison de Sabré.

While communicating with a business in Australia will typically involve talking to one contact and getting a response that day, or that week, this could take weeks in Japan, as the request is pushed up the chain, and then back down.

However, Wang notes that foreign businesses have an easier time pushing the limits of what is acceptable without insulting anyone – though pushing it too far can result in a blacklisting of your business.

“Japan is tough, but once you understand the process of launching, doing really good market research and taking small steps … you get it,” Sabré said.

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