Consumer e-commerce hits a brick wall in Japan

Jul 31, 2022 | News On Japan

After growing 20% since 2019, online shopping has stalled as COVID curbs ease

Jul 31, 2022 (Nikkei) - Japan's e-commerce market has lost momentum after growing more than 20% since 2019. Demand for online shopping surged as consumers hunkered down at home to avoid COVID-19, but the quick end to the spending spree has dashed hopes that online retail will become a new engine of economic growth.

E-commerce grew about 20% between 2019 and 2021, according to an index compiled by Japanese analytics company Nowcast and JCB based on credit card spending. A survey conducted by the Ministry of Internal Affairs and Communications for the same period found an increase of nearly 30% in e-commerce.

Tabe Choku, a farm-to-table delivery app with 650,000 users, saw its gross merchandise value jump roughly 130 times between 2019 and 2021. Aeon, an operator of supermarket chains, logged 75 billion yen ($551 million) in online sales in the year through this February, up 80% from two years earlier.

The trend in online shopping is also changing. Nikkei analyzed data collected by Tokyo-based research company Nint on online platforms Amazon, Rakuten and Yahoo, finding that the average unit purchase price on the sites rose 17% from January 2020 to 3,756 yen in April 2022. Prices climbed in nearly 70% of categories, including clothing, home appliances and furniture.

But online shopping is showing signs of slowing. The e-commerce consumption index compiled by Nowcast has leveled off after rising sharply through early 2021. In fact, the index declined for two consecutive months through June this year. "The COVID-induced demand has taken a breather," said an executive at an e-commerce company.

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