Selling Online in Japan with Rakuten, Amazon and E-Commerce Websites

e-Commerce - Amazon.co.jp Rakuten Japan, Selling Online

 

When looking to bring a product into Japan or to sell online to the Japan market there are a variety of ways to go about it - each with their benefits, difficulties and obstacles. Most commonly we see requests for onsite e-commerce stores using payment gateways and companies wishing to sell through Rakuten. There are other options such as Shopify and Amazon. Each platform suits each particular case which we’ll summarise below.
 

e-Commerce website with payment gateway

This is common if there is already a product or brand recognised in Japan so a market will be available to buy from the website. This approach to some extent allows a better profit margin depending on the payment gateway used. For non-Japanese companies however finding the right gateway can be a bit of a hassle, since it is the domestic ones that offer the most options but a lot of the integration is purely in Japanese. This means that if the website is being built on a system less common in Japan hooking it up to work is more involved that it would be elsewhere. For example EC-Cube is a popular open e-commerce platform in Japan. However our experience working with it compared to something like Drupal is that it doesn't compare. However for all the advantages of Drupal as a platform, since it is less supported in Japan integrating it with domestic payment gateways is more involved. Also it should be noted that many domestic payment gateways have restrictions if you do not have a Japanese legal presence.

For smaller brands and products in a competitive market the standalone site will have the difficulty of gaining awareness and traffic without a significant marketing campaign. Even then the visitors have to be confident in the brand/e-commerce site in that it is trustworthy to enter credit card details into.
Which is why other sales points are generally favoured by consumers and in turn the marketeers trying to sell to them.

 

Rakuten Store

Rakuten has the biggest market share for online retail in Japan. It’s huge, and that is the draw for companies looking to sell. Unfortunately while the rewards are potentially high the barrier to entry is also particularly costly and laboursome. We’ll briefly try and distill some of the particular points:
 
  • Rakuten have become tougher on international companies. 
    - Firstly to qualify for a Rakuten store in Japan you must have a company registered in Japan and a Japanese bank account. 
    - You will also have your company vetted and listed owner checked by Rakuten.
    - You must also guarantee Japanese speaking telephone and email support, which they will also check.
  • Rakuten itself is expensive. A seller pays by the number of SKUs they are allowed and the generally % fees are higher than Amazon.
  • Rakuten is not like Amazon in that a Rakuten Store is just that. You can sell what you like, how you like it, within your own store which is also connected to the search of the marketplace that also has everyone else’s stores.
  • Rakuten is very expensive if you plan to only sell a single product. Rakuten Stores are aimed at resellers or a company with a large number of SKUs.
    In the case of a single product of small number of SKUs, rather than owning a Rakuten Store a brand/product owner should instead seek to get as many Rakuten Stores as possible to sell their product.
  • The benefit of Rakuten is more towards companies who will sell a large amount of SKUs.
So Rakuten is complex and there are a number of solutions:
  • Really confident companies might take up the path of having another company set them up in Japan as an entity. This is a big move and the most serious. The purpose of this is to own the Rakuten Store yourself and with a large commitment to market entry. Such a move requires a Japan resident as the company head who will be responsible for the company in Japan. Sending your own staff out to Japan is not usually an option but can be achieved by hiring an agency such as First Step Japan to set up the company in your name on your behalf, so you may operate.
  • Another solution is to convince a Japanese company to act on your company’s behalf using their legal status to open the Rakuten store under your company’s name. This is slightly easier and quicker than the full-scale approach but has to be recognised that the company in question is taking on a lot of risk by accepting to effectively represent your company in Japan. This of course goes the same way, in that both parties must really trust each other.
  • Finally the easiest solution is to make a simple agree with a current Rakuten Store owning party, and have them sell your product. In this case the Rakuten Store would want to % of your profits and potentially a fixed sum for using their SKUs and production of the product pages. One thing about Rakuten is that unlike Amazon you have a lot of control over the product page itself. This is why you often see massive Rakuten pages in the Japanese stores. They are maximising the use of the SKU by providing as much information as possible to the buyers. It is also possible to create custom landing pages in Rakuten and create the semblance of a micro-store within a Rakuten Store. And in this way a Rakuten Partner could give a brand experience within their store and sell your products without you needing any further involvement outside of paying for the design and developement of them building and hosting it inside their store.
    This is a much better option when testing the appeal of your products and brand and making it available to a large market which is trusted. Additionally if the Rakuten Partner are incentivised they will also do some of your brand’s marketing since it is in their interest to sell your products.
Personally we feel for purposes of initial entry the smart money is finding a Partner who has a store and setting up within their store. Then if your brand/products are successful you can decide if it is worth having your own store or getting a local company to be the legal owner of your proxy store.
 

Amazon

Amazon is by far the easiest entry point for a new seller looking for Japan market entry.
There are still some Japan specific hurdles to overcome but as a place to get started with the lowest barrier for entry to a large market and potential for large sales.
 
  • Amazon is set up to sell internationally, in most cases you don’t need to be in Japan (although it helps) . Although for selling in some restricted categories definitely having a domestic presence is important.
  • The main thing Amazon is looking for is that your Seller Account and Support can be contacted in Japanese. If you ship your stock into an Amazon Fulfillment center then the need for customer support is removed. However the Seller Account number should be able to communicate with Amazon Japan.
  • If your product is unique then Amazon is a good choice as you will not have competition from resellers. You will however need a UPC to register the products in Amazon’s catalogue.
  • Unlike Rakuten you have less control over what you sell and how it is displayed, unless you are the brand owner -- and you then need to join the Brand Registration scheme.
  • What is useful using the Amazon approach is that you can enter the Japan market at a low commitment level and spend more of your market entry budget on marketing and promotion. You can use Amazon as the Sales point, while promoting the brand/products from a Brand website - directing the selling to your Amazon page. In this way your brand is also generating exposure from people buying it naturally through Amazon’s market place as well as your own efforts directing traffic to your brand site and social presences. A good example of this is Royal T ロイヤル ルイボスティー that strongly promotes the Royal-T brand first through its website and social channels and sells via the website to it’s Amazon listing.
    This way unfamiliar visitors to the site don’t have trust issues because they will trust Amazon, which also has the full spectrum of payment options, and Amazon shipping. This in turn cuts down a lot of additional costs for entry like the payment gateway, setting up shipping, SSL certificates and e-commerce development. When the product has grown and the brand site’s marketing is driving significant traffic to the brand site, the company could then expand its payment options with on-site payment gateways and other options.
 

Other Services to note - Shopify and Yahoo! Shopping

Both Shopify and Yahoo! are worthy of more detail but in general, Yahoo! Shopping is even harder to qualify for than Rakuten, with the added problem that if you fail to qualify you must wait 3 months before you can reapply. This happened with a respectable and experienced Japanese e-commerce partner of ours so we don't like the chances for international companies when other options are available. Also it is important to know that Yahoo! Japan is not Yahoo! at all. It was sold to a Japanese company called Softbank and a different entity. Shopify is a well known platform for selling online and to some degree it would work for Japan. However at present many of the payment options are not set up to deal with Japanese banks easily and you will be paid in dollars. The other factor is there are not many Japanese Shopify themes and it does require someone to be able to translate the Shopify interface for the customer - especially the cart and checkout processes. Shopify is potentially another easier entry method, but for our purposes it needs to be explored more.
 

Summarising Selling Online in Japan

 
Rain has experience with all the above platforms to understand the benefits and obstacles of each approach. We are always interested in providing the most effective way of meeting and exceeding a client’s needs when entering the Japanese market, so we are constantly looking at the different possible approaches for success and within the expectation of people unfamiliar with the various differences and obstacles of doing business in Japan.
 
Japan does seem to have culture of making the initial stages to get up and running extremely difficult, whether that is with the entrance exams for schools and universities, job interview processes, visa applications etc. So even before the actually challenges of the marketing, and setting up e-commerce to be active there is this immediate barrier to almost test how committed another party is. I would say this is what Rakuten does on purpose, so make sure their sellers are very serious.
Amazon being international however is much easier to gain entry to a market and test our the appeal of your products. 
 
This is why its important to understand what level of involvement will be needed, and the true cost of investment when deciding to enter the Japanese market online.
There is always a way in, its more about choosing the right one for you.