Amazon is the most popular ecommerce platform in Japan and the third largest Amazon market, in terms of sales volume, after the US and Germany. Given these facts alone Amazon Japan represents a big opportunity for brands looking to expand internationally. However, when introducing your product to Japanese consumers it is worth considering the pros and cons of selling on Amazon Japan before committing valuable time, energy, and resources to the platform.
Table of Contents
Pros to Selling on Amazon Japan
Familiarity
For many brands, especially those from North America and Europe, selling on Amazon Japan offers a welcomed sense of familiarity while trying to enter the very foreign and equally complex Japanese ecommerce market.
Given its size and influence, Amazon is one of those rare companies that doesn’t necessarily have to abide by all of the local rules surrounding web design—or even business practices—instead they tend to set the rules and dictate the pace wherever they go. Not many companies can get away with this approach, especially in Japan.
What this means for non-Japanese brands considering selling on Amazon Japan is that the overall experience should be more or less identical no matter which country’s version of Amazon you are used to using, which makes Amazon an accessible entry into the Japanese ecommerce market.
Important Note: Similarities in the look and feel aside, there’s still no getting around the need to translate your listings into Japanese!
Convenience
Amazon makes it easy as a seller to connect your accounts across different markets. Furthermore, when you sell on Amazon Japan, you don’t need a legal entity in Japan or a Japanese bank account to get started. While the second of these two points is also true when operating your own website, if your primary means of sales in your home market is Amazon being able to manage the bulk of your operations in one place is extremely convenient.
Trust
Customers the world over have come to trust the Amazon brand when it comes to ecommerce. By selling on Amazon Japan you can help alleviate issues surrounding the legitimacy of your website or concerns about your product in the minds of Japanese customers. The generous Amazon return policies, which are still fairly uncommon in Japan, is another reason shoppers may be more willing to purchase a new product on Amazon versus other websites.
Shipping (FBA only)
Shipping will be much faster if you use Fulfillment by Amazon (FBA) in Japan as opposed to shipping to customers directly from overseas. Although this also comes with the costs associated with using FBA, which will impact your margins.
Contrary to what you may have seen some sources say online regarding Japanese ecommerce, next day shipping is in no ways “expected” in Japan. However, shipping an in-stock item from within Japan and having it take longer than a week would not only have customers questioning your ability to manage logistics, but would very likely see them looking at alternatives from other brands instead.
It’s worth noting that this expectation regarding shipping is not necessarily because of Amazon Prime, as not everyone pays extra for the service, but mainly because Japan has a very extensive and sophisticated logistics network whose size makes it conducive to fast domestic shipping. That being said, ordering an out of stock item or something unique from overseas, of course takes longer and most people realize that.
Cons to Selling on Amazon Japan
Competition
Competition is intense on Amazon. The “Everything from A to Z” catchphrase they use is completely true and this amount of choice can be overwhelming for consumers in the face of so many options. Not only that, but given Amazon’s rules and standards for showcasing products it can be quite difficult for brands to stand out from the crowd.
When selling on Amazon Japan your products are always right next to competitors’, which is exactly what Amazon wants, seeing as how its mission is “to be the most customer-centric company in the world.” In other words, Amazon is first and foremost concerned with making the customer satisfied, and what better way than letting online shoppers see everything that’s out there and making it easy for them to compare alternatives in a standardized way.
At the end of the day Amazon benefits from any sale whether it be from you or your competition, so it’s a win-win for Amazon and the consumer regardless, but the same may not be true for you when selling on Amazon Japan.
People Searching for Bargains
People check out Amazon not just because of trust or the value they get out of Amazon Prime membership, people look to make purchases on Amazon because they know there are deals to be had.
Japanese consumers, as a whole, expect prices to be cheaper online. With competition being so fierce, it’s easy to get involved in price wars that ultimately leads to a race to the bottom among your fellow sellers. More often than not the pressure to offer a discount or sale is higher on Amazon than it would be if you only offered your product via your own online store.
Reputation Management
Reviews greatly influence the purchasing decisions of Amazon shoppers. Not every online store chooses to implement a review section on their own site’s product pages, but Amazon is all about reviews. The added level of attention needed to actively deal with reviews in a language that machine translations simply don’t work on can make managing comments and reviews for your products and business, especially negative ones, difficult.
Fees
Selling on Amazon Japan comes with a number of fees that can cut into your margins. If you sell your product on Amazon’s marketplace, but ship it yourself, you pay a fee to Amazon per every item sold. If you instead choose to go the previously-mentioned Fulfillment by Amazon (FBA) route, you’ll have to add in FBA’s warehousing and various packaging costs as well. Don’t forget that you will also need a service provider to serve as either an Importer of Record (IOR) or an Attorney for Customs Procedure (ACP) in Japan for your products once they arrive in Japan and these IOR and ACP services also come with certain costs that must be factored into your calculations.
Localization and Optimization
When selling on Amazon Japan not only do you need to localize your product listings into Japanese, you’ll also need to optimize them. The Japanese language is incredibly contextual, meaning machine translations will put out unintelligible gibberish which negates customer trust in your brand. This is why when dealing with Japanese language it’s important to have someone who actually reads, writes, and speaks the language to handle this task.
Additionally, simply putting a listing up on Amazon and not actively managing and optimizing it as the competitive environment changes is setting yourself up for failure. Similar to any search engine, SEO is important to get the most out of your Amazon listings. Without both proper localization and optimization it is highly unlikely that your products will sell on Amazon Japan.
Regulations in Japan
It goes without saying but every country has their own rules and regulations which you need to follow in order to sell your products there. Furthermore, in the case of selling on Amazon in Japan, there are specific categories of prohibited products that might prevent you from selling your products to Japanese customers. Despite the importance of these regulations for non-Japanese sellers, Amazon Japan’s English translations of the rules are not infallible and may require consulting with Japanese-speaking specialists to ensure you are in the clear.
Other Costs: Amazon Ads
While not “required” per se, Amazon is in fact a search engine. This means that Amazon implements many of the same practices as other search engines, like Google, with regards to how it displays its search results. Nowadays the first results users typically see above-the-fold are not organic search results but ads. This is an incredibly important, yet often overlooked aspect to successfully selling on Amazon Japan that can add significantly to your costs of doing business on the platform.
A search for “iphone case” illustrates how the top search results are predominantly ads or “sponsored products.”
In more competitive categories you may find that what you originally thought was going to be a cost-saving measure for your brand by selling on Amazon Japan, as opposed to selling directly to Japanese consumers through your own website, hasn’t panned out exactly as you expected since you still have to pay for Amazon ads to achieve sales goals.
Pros and Cons to Selling on Your Own Site
Pros
Margins
It’s almost guaranteed that your margins are going to be higher if you sell your products through your own site. Amazon takes a cut of all sales, and if you choose to go the route of fulfillment by Amazon (FBA) you will have to pay for storing inventory in their warehouse as well. The fees from FBA can really add up in some cases which is why some brands choose to sell from their own webstore instead.
Branding
If you’ve got a unique product and brand identity then your own site is definitely the only way to go.
Selling on Amazon Japan comes with sacrifices in order to adhere to their rules which ensure that customers have a shopping-on-Amazon kind of experience. In other words, when you sell on Amazon you are giving up your branding ability for the opportunity (there is zero guarantee) to sell to Amazon’s large customer base. When taken out of a carefully crafted brand context, your product may come off as just another choice out of many, which may not be the direction you want to go in.
As seen in the above image Amazon has a no-frills, straightforward style to their website and detailed images are not always large enough or of the highest quality due to size restrictions. If you want to present your brand and your products in the best light or you need complete creative control that selling through your own online store provides.
Operating Costs
Depending on your expected order volume from Japanese customers it might not be too difficult or costly to ship from your own warehouse or store instead of relying on FBA. Especially if you already have a robust shipping and logistics setup/operations this could be a real option to consider instead. When you choose to go this route it not only means higher margins, but may in fact be more cost effective as well.
Cons
Generating Traffic
In order to generate sufficient traffic to your website from Japan you will need to utilize some form of digital marketing. The most popular choices are SEM (i.e. Google Ads) and Social Media Advertising, or some combination of the two, although content marketing and SEO should also be utilized for maximum effect. Unlike with Amazon Japan, there is no built in audience of Japanese users from the get go when using your own site.
Fewer Payment Methods
Certain payment methods, including cash on delivery (COD) and convenience store payments (konbini barai) are still used and offered by sellers on Amazon Japan. If you are operating your own webstore from overseas then you will likely only be able to offer credit card as a payment option, which some Japanese customers may not have or may not wish to use.
Touchscreen kiosk to make payments at a Japanese convenience store
Selling on Amazon Japan Summary
Ultimately the choice of whether or not to sell on Amazon Japan comes down to your goals for the market.
While selling on Amazon in Japan can make sense for some brands, others may find that the costs outweigh the potential benefits and that selling from their own online store is actually the better option.
An important thing to keep in mind when selling on Amazon in Japan is that the competition scales equally with the increased user base that the platform offers.
Add to this the need to constantly manage your listings in another language, especially in response to actions taken by your competition, selling on Amazon in Japan is by no means a “set it and forget it” type of deal.
Although Amazon can at first glance appear like a low hanging fruit for brands eager to enter the Japanese market, the most important thing to remember is that selling on Amazon in Japan is not “easier” than selling from your own store. Amazon Japan presents its own challenges, including language and cultural barriers, that require implementing a proper strategy in order to succeed.
If you’re ready to take the next step in selling your product in Japan then contact us to schedule a free consultation to see how we can help.
