Digital world offers market successes and communications opportunities despite sluggish economy

Several recently-reported successes from both U.S. and Japanese companies illustrate how rapidly Japanese consumers are adapting to the digital world. These market successes range from digital devices to social networking to online sales to electronic money; taken together, they emphasize the importance of considering the digital landscape in communications and marketing endeavors.

It might be difficult to find a better example of success in Japan right now than Apple’s iPhone. With shipments having more than doubled in the past year, the iPhone held 70% of Japan’s smartphone market at end of the first quarter, 2010. The second-highest shareholder was Taiwan’s HTC Corporation at 11% of the market. This market will be highly competitive in the coming year, with Apple and both DoCoMo and KDDI (Japan’s largest and second-largest mobile-phone operators, respectively) all having introduced new phones in June. But what is interesting is how rapidly Apple (via its partnership with SoftBank) was able to win over such a large base of Japanese fans across all age groups.

Another example of an American company finding success in Japan is Twitter, whose social networking environment is even more well-leveraged in Japan than in its home market. The percentage of Japanese Internet users who “tweet” is reportedly 16% compared to America`s 10%. One might have anticipated this considering the high incidence of Japanese-language blogs among worldwide blogs, representing over one-third. However, it is still somehow surprising and is certainly a phenomenon not to be taken lightly.

One Japanese company that has found success in Japan’s digital world is now even taking its proposition overseas. Rakuten Ichiba, Japan’s largest online shopping site, recently reporting domestic operating profits of 20% over the previous year. Online shopping was one of the true success stories of 2009, with sales through this channel thriving in a period when overall consumer spending is down. Rakuten recently acquired the U.S.-based e-commerce site “” and the French e-commerce website “PriceMinister.” Hiroshi Mikitani, Rakuten`s founder and CEO, has been quoted as having plans to “move into 30 markets, with 10 additional countries by the end of 2010.”

Another high-performance Japanese company, Uniqlo, ranks among Japan`s 10 most valuable brands and has some 800 stores domestically and 140 overseas. What is interesting is that this highly successful “bricks-and-mortar” retailer is now aiming to also become a major competitor in the digital world as well. Uniqlo U.K. will handle Uniqlo`s e-commerce operations, and envisions being the most profitable store by the end of 2010. Based on Uniqlo’s success thus far, it is an excellent company to watch for retail innovations, both in Japan and overseas.

Finally, another example that demonstrates the rapid uptake of “things digital” by Japanese consumers is related to payment systems. Specifically, transactions utilizing “electronic money” reportedly rose by 43% year on year in May 2010, the highest growth rate yet. The number of transactions for May was 161 million, and took place largely at supermarkets and convenience stores.

Japanese consumers have long demonstrated their passion for electronic gadgetry and staying connected, and they are rather rapidly adapting to the digital world. In addition to the “new” sales channels that have been enabled by the digital world (such as via Rakuten), its “social” aspects (i.e., blogs, social networks, etc., such as Twitter) are playing an increasingly important role in how consumers evaluate products, make purchase decisions, share their opinions and stay connected with friends and business colleagues. As a result, progressive companies such as Uniqlo and others are actively incorporating digital-based strategies into their plans for communicating with, motivating and selling to customers and prospective customers.

Debbie Howard is Chairman of CarterJMRN and President Emeritus of the American Chamber of Commerce in Japan.

Originally Published in Nikkei Weekly, 19th July 2010

CarterJMRN is a strategic market research agency that has been helping clients with consumers and businesses in Japan and beyond since 1989.

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