Japanese appetite for online purchases is accelerating amid Covid-19

12 May 2020 Consultancy.asia

The Covid-19 crisis might be the harbinger of a thriving ecommerce market for Japan, as people move to online shopping under lockdown. This is according to a new Boston Consulting Group survey of consumers in key markets across the Asia-Pacific region.

BCG surveyed consumers across APAC, with a specific focus on key markets of Japan, Australia, India and China. The firm found that the overall level of concern in APAC appears to be higher than in other markets across the globe, while Japanese consumers are the most concerned within region.

Nearly 90% of Japanese consumers expect a recession due to Covid-19. This figure is high across the board in APAC markets, but Japan still leads the pack. More than 80% of Japanese consumers also expect the Covid-19 crisis to get progressively worse, which is in sharp contrast to other APAC economies, where well over half believe that the worst of the crisis is over.

Concern over Covid-19

Perhaps the most telling sign of concern in Japan is the high level of self imposed restrictions. Unlike certain other countries including the US, the UK and Italy where lockdowns have been imposed on an enforceable basis, Japan’s is a soft lockdown where isolation measures are voluntary. Despite this, more than 90% of Japanese consumers have restricted their local leisure activities, domestic travel and restaurant outings, which is at par with the isolation levels in the US, the UK and Italy.

“This voluntary modification of social behaviour probably reflects Japanese consumers’ heightened concern about the future impact of the virus,” said BCG. On the other hand, the crisis appears to be covering ground in an economic segment where Japan has lagged behind for years – the ecommerce market.

As Japanese consumers curb their social activities, much of their commercial activity is moving to the online sphere. Despite having a budding ecommerce market worth approximately $100 billion, Japan has struggled with ecommerce penetration across various population segments in recent years.

Japanese consumers cut spending

At less than 10%, Japan’s ecommerce penetration rate lags well behind other major economies across the globe. While France and Australia are marginally ahead of Japan, the UK and the US exceed it considerably in terms of market penetration, while China is miles ahead of the rest of the pack with nearly 40% ecommerce market penetration.

Japan has lagged behind other major economies partly due to an ageing population. Japan’s population has the highest media age in the world, at more than 46. As a result, most consumers in Japan were slow to adapt to the digital lifestyle, while many are still weary of conducting financial transactions online. While ecommerce has still managed to flourish, many in Japan refrain from conducting financial transactions via mobile, which has prevented it from reaching its potential level of penetration.

Covid-19 is changing this scenario. Online purchases in Japan are expected to rise across a variety of ecommerce segments, including clothing, luxury goods, supplements, cosmetics, personal care and fresh food, among a number of others. Consumers have indicated that they plan to increase online purchases in each of these segments, although to varying degrees.

Growth of ecommerce penetrationBCG reports that online food delivery is one segment that is seeing an increase across all age groups. From Baby Boomers to Gen Z, most consumers plan to order in as they continue under lockdown conditions.

Ecommerce growth represents the silver lining amid a dampened economic outlook in Japan, at least amongst consumers. Japan has already seen the cancellation of the Olympics this summer, which is usually a tremendous economic opportunity for the host country. Other economic consequences of the crisis are also playing out, and consumers are now bracing themselves for the overall outlook to get worse before it gets better, according to BCG.