22 Jan 2021
Posted in Banking
COVID-19 accelerates e-commerce market growth in Japan, says GlobalData
Japan is one of the most developed e-commerce markets globally and ranks second in Asia, only behind China. The market has registered sustainable growth over the last five years supported by high mobile and online penetration and increasing consumer confidence in online transactions. The growth in the e-commerce has been further accelerated by the COVID-19 pandemic, according to GlobalData, a leading data and analytics company.
An analysis of GlobalData’s E-Commerce Analytics reveals that e-commerce sales in Japan are estimated to grow by 10.1% in 2020 to reach JPY21.4 trillion (US$197.1bn), compared to earlier pre-COVID-19 estimate of 7.2%. E-commerce sales are expected to rise at a compound annual growth rate (CAGR) of 7.5% between 2020 and 2024, to reach JPY28.6 trillion (US$263.5bn) in 2024.
Nikhil Reddy, Banking and Payments Analyst at GlobalData, comments: “While the crisis caused a plunge in the overall consumer spending, there is a rise in online spending, as wary consumers stay home and use online channels. With social distancing rules in place and closure of many brick and mortar stores, shoppers had to embrace online channel even for day to day shopping.”
According to the ‘Household Consumption Survey (May 2020)’ conducted by the Ministry of Internal Affairs and Communications, Japan, the percentage of households using online shopping reached 50.5% in May 2020, a 8.2 percentage points rise from same period last year.
As Japanese consumers continue to embrace online shopping, the use of electronic payments will rise as consumers are moving away from cash-based payments due to fear of getting infected.
As per GlobalData’s 2020 Banking and Payments Survey* for online purchases, payment cards are the most preferred payment method for e-commerce purchases in Japan, accounting for 71.6% share, while alternative payment solutions accounted for 18.4% share.
Mr Reddy concludes: “The pandemic has brought in a permanent shift in consumer buying behavior pushing them towards online, a trend that is expected to continue even beyond the COVID-19 pandemic.”