Digital Commerce in Japan

PROSPECTS

Encouraging small retailers to adopt mobile payment

Despite Japan’s persistent fondness for cash, strong technological foundations exist for the development of mobile payment in the country. Moreover, the connection of mobile wallets with credit, debit and pre-paid cards is set to enhance their convenience and strengthen faith in the technology.

Increasing emphasis on mobile

The deepening penetration of smartphones and their increasingly embedded role in daily lives are fundamentally reshaping how consumers search for information and shop. As a result, it is becoming increasingly important for retailers to focus on the development of digital commerce activity that is suited to the specific requirements of mobile.

Blurring boundaries

The efforts of store-based players to adapt to competition from internet retailing, changing consumer lifestyles and the increasingly embedded role of digital technology in consumers’ everyday lives are leading to a blurring of the distinctions between the traditional bricks-and-mortar and digital environments.

COMPETITIVE LANDSCAPE

LINE continues to diversify its service offer

The most popular mobile communication tool in Japan, LINE has been used as a platform for an expanding range of services since its introduction in 2011. The mobile payment service, LINE Pay, was added to the app in 2014, with LINE Delima (food delivery), and LINE Shopping (e-commerce) being added in 2017, and LINE Travel (online price comparison) joining them in 2018.

Partnering with major Chinese players

The end of the review period saw developments in mobile payment provide small retailers with the opportunity to take advantage of the large numbers of tourists visiting from China, which have played an important part in driving growth in Japanese retailing in recent years. In 2018, Chinese multinational, Tencent Holdings, teamed up with social media app operator, LINE, to offer mobile payment services for small Japanese retailers, while Yahoo Japan and SoftBank Group joined with Alibaba Group Holding to provide a rival service.

GU takes hybridisation a step further

The blurring of boundaries between the physical and digital arenas was highlighted by the opening of the new GU Style Studio in Harajuku in December 2018. Consumers are unable to make physical purchases in the store, but rather try clothes or make an avatar that resembles them try clothes of varying sizes, colours and designs.

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