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Japan is a large and attractive market for many businesses, but it is also very different from others around the world. This makes understanding its culture a crucial exercise for any company looking to do business in the country, with extensive knowledge required to win Japanese consumers’ trust. For those who understand how to localise their shopping experience and meet these consumers’ cultural expectations, however, the opportunity is massive. So what are the key factors to understand?
How language affects buying behaviours
Japan is a single-language market, with low English proficiency – over 70% of consumers say they will only buy from websites that are in native Japanese. However, simple English is acceptable on billboards and other big commercial spaces, as well as on websites, giving a modern impression.
Before making a purchase, Japanese consumers like to get as much information as they can, so a clear description of the products and delivery terms and options is key. Japanese websites are known for being extremely text-heavy, with extensive product descriptions and little white space. What’s more, using polite language (keigo), predicting customers’ needs and offering help or discounts to improve experience, are all fundamental elements of customer support in Japan.
Japan is a cash-dominated society 
Japan is one of the richest countries in the world, so consumers typically have more disposable income to shop than other western countries. Japan is also the largest luxury market in the world. International brands such as Bvlgari, Salvatore Ferragamo, and Gucci generate 27% of their global revenue in this market alone.
Yet while Japanese consumers are ready to spend money, they are very careful about sharing their card information online and are highly attuned to the risk of fraud. As a result, they tend to avoid online card payments if they don’t see that the website is trustworthy enough – leading to a cart drop off if there are no other payment options offered.
One of such payment methods that promotes trust is payment via convenience store, known as Konbini. These can be found on every corner and serve as a one-stop-shop where you can buy food and drinks, pay bills, use ATMs and printing machines – and pay for online purchases. Consumers can even have their orders delivered there instead of to their homes. According to Nippon there were 56.919 Konbinis in January 2022 in Japan.
As this preference for cash is not sustainable, the Japanese government wants cashless payments to account for at least 40% of all transactions in Japan by 2025, up from about 20% last year. It hopes encouraging digital payments use will help support tourism and drive innovation within the country’s financial sector. In an effort to meet this goal, The Ministry of Economy, Trade and Industry (METI) selected 29 municipalities were selected to serve as ‘pilot municipalities’ for the introduction of cashless payments at service counters and public facilities in FY2020. The Payments Japan Association has also released its ‘Guidelines on Approaches to Introducing Cashless Payment into Municipalities (First Version)’, a compilation that details specific steps that municipalities can take to introduce cashless payments into their services.
Ecommerce fraud and fraud prevention
Japan has also forged a reputation as a country with relatively low ecommerce fraud rates, with only 0.1% of transactions registered as fraudulent. Many factors contribute to this phenomenon, one of which is that it is a low crime rate country.Over 40% of ecommerce transactions are made with payment methods like Konbini, bank transfers, carrier billing and digital wallets, all of which are less prone to attacks and often come with stringent identity verification processes that make them less easily accessible to fraudsters.
Considering that Japanese is not a widely spoken international language, consumers are also alert to poor Japanese as an indicator of fraud. Anything that is poorly described or grammatically incorrect will cause a loss of consumer trust during the buying process – making for a tough barrier for international fraudsters.
The ecommerce environment is becoming more competitive, so merchants must ensure adequate anti-fraud measures to avoid cart abandonment and revenue loss. Explaining the security measures to the customers and automated behavioural analytics leveraging AI is key for increased protection.
While it’s clear that successfully selling to the Japanese market entails a considerable workload, it’s also worth stressing that the opportunities it offers are equally impressive. Japan is the world’s third-largest economy and fourth largest ecommerce market, worth more than USD 140 billion, with a growth rate of 9% a year. Moving into Japan has never been easier than it is today with a good local partner – and it’s certainly worth the effort.
 
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Degica
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21 Nov
21 Jan
This post is from a series of posts in the group:
Share opinion and experience on how the payments landscape is changing and learn about the challenges and opportunities facing payments stakeholders in the future.
Koen Vanpraet
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Steve Morgan
23 Nov
Donica Venter
22 Nov
Arianne Rosmolen
22 Nov
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