Online sales soar in Japan

03/15/2012
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TOKYO (majirox news) — The days of the glittering department store, selling everything that a customer could possibly need, may be numbered. Who needs smartly uniformed “elevator girls” to bow you in and out of automated elevators, when you can click a button in the comfort of your own home?

Sales of goods through direct marketing channels in Japan are poised to overtake sales made through the country’s famed department stores within the next few years, according to Masayuki Kakio, an analyst at the Japan Direct Marketing Association (JADMA). He also points out a shift from newspapers to the Internet as the primary advertising channel.

“People still read the papers,” he says, “but now they’re the digital versions on their smartphones or PCs. You just have to look at the trains and see the smaller number of actual newspapers to realize this.”

He added that newspaper direct marketing advertisements are largely aimed at the traditional print reader market in the over 50s age group: promoting cruises, dietary supplements, and anti-aging cosmetics. But even this significant graying market sector (approximately a quarter of the current Japanese population is over 65 years old) is Internet-minded. Two-thirds of the women and half of the men over 60 are using the Internet for shopping. Women typically use the Internet to purchase health foods and supplements, cosmetics, food, and other beauty-related products, with the first three categories often being monthly repeat sales.

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“This is a group whose members don’t want to spend time in doctors’ waiting rooms, but they’re health-conscious and food-conscious, and they want supplements to fight aging,” Kakio said. “They have the time and money to indulge their hobbies, and products aimed at this demographic are selling well.”

In fact, Internet media advertising has quadrupled over the past eight years or so (from US$2bn to US$8bn) and that the sales through direct channels have increased from US$31bn to US$58bn (about $500 per person) with about 10% of these sales being for US-sourced products. Smaller companies use online malls such as Rakuten (Japan’s largest ), while larger retailers, such as Uniqlo (Fast Retailing) and Yodobashi Camera electrical stores operate their own direct sales operations over the Internet.

Kakio points out the importance of these multi-channel operations where bricks and mortar complement the online offerings. “Companies must keep in mind that they need customers to buy their brand and at their store, however they make their purchases,” he says.

They must also take into account the lifestyles of their customers, as well as their convenience, he adds. This is reflected in the 2009 creation of the Consumer Affairs Agency and the passing of the
Act on Specified Commercial Transactions. According to this legislation, customers who purchase through direct marketing channels may return the purchased item within eight days, if conditions governing the return of goods are not clearly specified in the advertisement. Such conditions must be clearly stated as part of the purchase agreement, and Kakio points out that in cases of ambiguity, the onus is on the vendor to accept the return.

The Ministry of Economy, Trade and Industry (METI), which governs this market, has posted clear guidelines on its Web site. METI also supports JADMA, the non-profit body for which Kakio works, as the official representative body of the direct marketing industry in Japan, coordinating self-regulation, as required by law.

The Japanese consumers are buying and selling millions of yen worth of products every day. They’re doing it at home, at work and on the train. So smart companies that want to increase business and sales need to take a look at them, as online shopping continues to grow by leaps and bounds.

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