An Introduction to Shipping for E-commerce in Japan
It’s no secret that Japan is an attractive target for online businesses. With the world’s third largest e-commerce market, Japan’s wealthy populace has wide internet access and a love for online shopping.
Many retailers who set their sights on Japan fail to properly account for cultural and practical nuances and run into easily avoidable problems. For e-commerce in particular, an understanding of shipping and logistics is crucial. Japanese customers have a high expectation of quality in the delivery process, and a misstep in this area can damage your reputation and your chance of success in the Japanese market.
The Market Landscape
It is impossible to conceptualize delivery in Japan without first exploring the three corporations that have almost complete control over the business.
Japan’s e-commerce shipping landscape is dominated by three expansive organizations that control more than 90% of the domestic package delivery market. The largest, Yamato Transport, delivers over 1.8 billion packages every year. Sagawa Express, a close competitor, provides logistics services for key customers including Amazon.
With demand for home delivery services increasing to unsustainable levels, these two providers have been forced to strategically limit the number of packages they will handle and cut back on some of their more expensive services, including the practice of ‘redelivery’, where an uncollected package is redelivered to the destination address repeatedly until it is successfully collected.
To add to Sagawa and Yamato’s woes, poor conditions for couriers have led to a labour shortage in the industry. When taken as a whole, the shortage of labor and demand for increased wages coupled with the strategy of limitation has resulted in both Yamato and Sagawa increasing their unit shipping prices.
While the third largest domestic post organization Japan Post is expected to follow suit by increasing both its basic delivery charge and negotiating higher rates with key customers, they have also capitalized on the opportunity to manage domestic shipments left behind from Yamato and Sagawa’s strategy of restriction, seeing tremendous growth in their “Yupack” parcel delivery service, traditionally only available to enterprise businesses and now recently useable by private individuals. However, while the ever increasing demand reaching almost 4 billion annual package deliveries pushes growth in the industry as a whole, the sheer number of items requiring delivery within Japan is pushing the capabilities of these companies and forcing all of them to explore ways to save costs and optimize their process.
High Quality delivery service is expected
Japanese consumers have high expectations for home delivery services, and along with the previously mentioned practice of redelivery, services including next-day delivery, delivery at a specified time and the ability to designate a pick up location such as a convenience store have come to be expected by the average e-commerce consumer. These services, along with widely used cash on delivery and convenience store payment methods have created an environment of comfort and accessibility for the consumer while putting additional strain on the resources of Japan’s major shipping providers. While the future of these practices is uncertain, the current climate provides an excellent opportunity for prospective e-commerce merchants to take advantage of the rising number of Japanese consumers that favor the online shopping experience.
Online Resources
For an e-commerce business, dealing with the three major shipping providers is a relatively simple process. For a business that has a high volume of orders, Yamato provides its “B2” online upload system, where orders can be entered through CSV upload or manual entry. Likewise, Sagawa provides a simple label creation and order data entry system with “e飛伝” (e hiden). Finally, Japan Post offers convenient online services including Clickpost, an online delivery registration system that offers domestic delivery at a flat rate and tracking services for shipments. Also available online from Japan Post is the increasingly popular “Yupack” service.
Language and data formatting requirements can be restrictive and time consuming when dealing with these services, so prepare to spend some time working out an efficient process. (At Flagship we developed a Shopify app for merchants struggling with these systems — https://apps.shopify.com/japan-order-csv)
The world of logistics can be intimidating, but thankfully Japanese consumers have been treated to high level, reliable delivery services that have made online shopping an extremely attractive option. While there may be murky waters ahead for shipping providers, now is the perfect time for merchants to take advantage of the swell in demand for online goods.
