TOKYO: Japan’s cross-border e-commerce is booming again, with many smaller companies joining the market to take advantage of the yen’s sharp decline and advances in information technology, the latter of which makes it easier to communicate with buyers and handle customs paperwork.
The US and China are the biggest markets for Japanese products. Online sales to China hit ¥2.13 trillion (US$14.37 billion) in 2021, up 10% from the previous year, while sales to the US grew 26% to ¥1.22 trillion, according to the ministry of economy, trade and industry.
The combined total roughly equals 10% of Japan’s overall exports to the two countries for the same year, though online transactions of less than ¥200,000 are excluded from the statistics.
Overall sales are also growing. The index of yen-based sales in the first six months of 2022 rose 80% from the same period in 2020 and increased 3.7 times from five years earlier, led by orders from Southeast Asia, Europe and North America, according to Beenos, Japan’s leading cross-border e-commerce service provider. The Tokyo company helps more than 3,000 businesses sell merchandise overseas.
Strong demand for Japanese diapers and other everyday items created a boom in cross-border e-commerce around 2015. But this time sales are being led by luxury items, including accessories and watches, according to Shota Naoi, president of Beenos.
Thanks to the yen’s sharp depreciation, Japanese products are now cheaper overseas. Despite ongoing inflation, the average per-customer spending on Japanese goods rose only 4% in two years since the first half of 2020 when converted to local currencies using effective exchange rates, according to Beenos, which tallied the data from its business partners.
About 26% of US consumers who purchase goods online from overseas have increased their spending on Japanese products, according to Beenos.
The yen briefly fell past 149 against the dollar on Oct 17, reaching a fresh 32-year low.
Kurenai, a curtain maker in Osaka, is having brisk sales on Amazon in the US. In particular, the company has seen strong demand for its high-end “one-way” curtains that let users see outside but not the other way. “The yen’s depreciation helps us make profits,” said Kurenai President Yoshiro Tsuda.
Bertrand, a Kyoto-based operator of an e-commerce site selling bento lunchboxes, has seen 20% to 30% rises in monthly sales since the start of the year, to ¥12 million to ¥13 million. Company president Thomas Bertrand said the weak yen has enabled it to pour more money into marketing and building inventory.
Advances in IT have also lowered hurdles for smaller companies to enter the cross-border business. Previously, if they wanted to sell overseas, they had to deal with the complexities of translating product descriptions, communicating with customers, and filing delivery and customs documentation. But now they can utilise services offered by large e-commerce operators and support agents.
A survey by the Japan External Trade Organization found 48% of smaller companies have started or are considering cross-border e-commerce, about 10 percentage points higher than large companies.
Productivity tends to improve when companies begin exports, according to the annual report on the Japanese economy and public finance released by the government’s Cabinet Office. “Cross-border e-commerce offers smaller companies opportunities to change business structure and management,” said Hideo Kumano, chief economist at Dai-ichi Life Research Institute.
Japan lags other countries in e-commerce. A survey by the Organization for Economic Cooperation and Development found only 22% of smaller companies in Japan sell goods or services online, lower than the global average of 31%. That means there is still more room for Japan’s e-commerce to grow, even though the cheaper yen may not last forever.