DEVELOPMENT-JAPAN: Late Starter in E-Commerce Plays Catch-Up

By Suvendrini Kakuchi Reprint | | Print |

Suvendrini Kakuchi

TOKYO, Jan 10 2001 (IPS) - As late as two years ago, online selling was the farthest thing from the mind of Atsuko Sato, owner of a Tokyo grocery specialising in imported foodstuff.

But last month, Sato took a leap into the Net, and finally opened her very first shop in cyberspace.

“The Internet was something I thought only concerned the young,” says the 55-year-old businesswoman. “But then I realised I was going to be left behind unless I decided to change my ways and start learning (to use) the computer.”

In truth, while Japan is known worldwide for its technological advances, many of its people had been slow to take to the computer, much less the Web.

In the last few years, however, Internet users in the country have been increasing in number. According to the Ministry of International Trade and Industry, Japan now has nearly 28 million ‘Netizens’ — up from less than three million in 1997.

Other official statistics show that e-commerce in the country is thriving as well.

But business-to-business trade through the Internet is still at a very modest 12 million yen (103,057 U.S. dollars).

However, business apparently has been so good that the figure is expected to leap up to 68 trillion yen (584 billion dollars) by the year 2003, with business-to-consumer trade estimated to reach almost three trillion yen (25.76 billion dollars).

Such projections have thus made eager ‘cyberconverts’ out of the likes of Sato, who forked over more than 5,000 dollars to a Webmaster to design her site and get it going.

And while it is still too early to tell whether her e-business will succeed, Sato takes comfort in the fact that her cyberneighbours include not only banks and industrial giants such as Sony and Matsushita, but also several enterprising Buddhist temples that have set up virtual graveyards.

“Japan is certainly making up for lost time,” says Joseph Kim, who heads the Internet Capital Group Japan K.K.

Kyoko Fujimoto, an editor at ‘Japan Inc.’, a magazine covering e-commerce, even predicts that it will not be long before Japan becomes as hooked on the Web as the United States, the current global e- commerce leader.

“The Japanese are getting the hang of e-commerce and loving it,” she says, adding that Japanese companies would soon be relying heavily on transactions on the Internet as more and more of them realise the advantage of dealing directly with each other.

She also foresees more people shopping on the Japanese websites in the next few years.

According to some Internet observers, the flurry of e- commercial activity in this country can be attributed partly to the government’s drive to make Japan among the top ‘IT (information technology) nations’.

Indeed, the Prime Minister’s Office has already set a goal of having 60 percent of the population on the Net by 2005, with 30 million households wired with high-speed telecommunications cables.

But others say the prospect of getting more out of their weakening yen is the major attraction for many Japanese who have begun shopping online.

The experience of Masayuki Arai, who runs a cosmetic company here in Tokyo, confirms this.

“I started selling on cyberspace four years ago and sales are around three million yen – 27,000 dollars monthly. Customers are buying because they are paying 50,000 yen or around 480 dollars for a product (I used to sell for) 80,000 yen, or 780 dollars,” he says.

Arai says that by selling directly to the consumer, he has managed to reduce the price of his products by about 30 percent. He says he would be unable to make the same price cut if he were still going through major retailers.

Fujimoto herself thinks Japan’s long-suffering consumers are finally getting a break in the cyberstores.

“For decades, we have been paying exorbitant prices for goods compared to other countries and thinking there was no way out of the situation. The Internet is promoting a (consumer) revolution in Japan,” she says.

Still, some experts warn of future problems unless Japan develops laws and cheaper Internet infrastructure. Without these, they say, the current cyberboom may just go bust.

Several experts have already noted the rise in lawsuits filed against Web companies that have stolen domain names, peddled pornography or gotten involved in credit card forgeries.

Others, meanwhile, note that Japan’s expensive telephone charges could well bedevil not only the cybershopper but also the cyberstores.

“It is wrong to think that doing business on the Internet will (be) a gold mine for everyone,” says Yuichiro Itakura, whose cyberstore that sold a variety of goods went bankrupt recently.

He also says that the success of online sellers based in North America cannot be easily replicated here in Japan.

Argues Itakura: “In Japan, shoppers have most of everything they need in their neighbourhood, making it difficult to sell online as easily as in other countries.”

As for those aspiring to make global sales, he says that the language barrier may be too formidable to tackle.

But Fujimoto says aspiring Japanese e-retailers can only learn from failures such as that of Itakura’s company. “There is no turning back now. Japan is on the road to becoming an Internet culture,” she insists.