E-commerce Soars in Japan, Smartphones the Cause?

The Nikkei reported this week that Japan’s e-commerce sales increased 16.9 percent during fiscal 2010. This brings online shopping sales to a total of 1.59 trillion yen (approximately $20 billion). The newspaper credits the surge to traditional retailers upping their presence online. The Nikkei also suggests that e-commerce growth is linked to the growth of smartphone use.

I am a fan of the Nikkei; I read it every single day. But this smartphone theory makes me skeptical. After all, Japan has arguably the most advanced mobile environment in the world, with 3G Internet use on phones for the last ten years. Surely online shopping was prevalent before the recent introduction of smartphones. It turns out it was.

According to a survey by Net Asia (Japanese) in January of this year 57.5 percent of mobile users have experience shopping online via their phones. There is certainly still room for growth but the experience is not novel to the smartphone.

Also, according to comScore (Japanese), by the end of fiscal 2010, there were just shy of 10 million smartphones in Japan. If the year-on-year 230 billion yen sales increase is attributed to these 10 million users — which of course the Nikkei isn’t strictly suggesting, but bear with me–the average revenue per user is 23,000 yen ($300). This is not inconceivable but it is highly unlikely.

The Rakuten Android apps

Of course e-commerce sales’ increase is a result of many factors. But the implication that smartphones play a major role is an interesting notion. Especially since the suggestion is that smartphones are driving sales in addition to those from PC purchases instead of just eating from PC’s share.

So what is it about smartphones that stimulates e-commerce? That is a question deserving of its own post. My best guess is smartphones support impromptu purchases. Also, as Rakuten has implemented in its smartphone apps, the ability to scan barcodes in brick-and-mortar stores and purchase cheaper goods on the fly aids sales.

While I am hesitant to give smartphones too much credit for the last year in e-commerce sales, their potential is undeniable. With the smartphone market share at about ten percent, Japan is positioned at just the beginning of the smartphone boom, making the outlook for online stores even better.

[Photo credits: Gapis, smallbusinessfriends]