Modern spice routes

Online cross-border shopping is booming, according to a recent study commissioned by Internet financial payment service company PayPal. Japanese retail companies, both small and large, would do well to understand this trend and reposition themselves to offer Japan’s rich consumer culture and wide array of well-made, well-designed goods to the world.

Unfortunately Japan seems to be lagging behind. According to the survey, the United States was the most popular cross-border shopping destination, followed by Britain, China and Hong Kong. Those countries along with Canada, Australia and Germany will see a total of $105 billion in cross-border online shopping this year. That figure is projected to triple over the next five years.

Japan, however, has only a small part of this total. Its consumer economy remains largely inside Japan and in Japanese. Online, Japanese are still mostly buying from abroad but not yet selling.

In contrast, some 18 million Chinese consumers make purchases from overseas online, with 52 percent of them having bought goods from Japan.

Annual online sales across borders were broken down into five main product areas: apparel and accessories ($12.5 billion), health and beauty products ($7.6 billion), computer hardware ($6 billion), personal electronics ($6 billion) and jewelry, gems and watches ($5.8 billion).

All of these are areas where Japan has a solid consumer industry and could, theoretically, compete well.

Japan’s biggest problem, ironically, may be English. Buyers cannot buy from abroad unless they can communicate in English online, and sellers here in Japan cannot sell abroad unless they have English websites.

Globally oriented online retailers must offer their goods in a number of languages, but Japan has been reluctant to take the plunge into English-language marketing. Setting up more online sites would help reduce Japan’s record trade deficit and boost the domestic economy.

The survey suggests that opportunities will only expand in the global consumer market. Smaller and midsized retailers need to understand which markets are saturated and which are opening. Smaller merchants can now sell anywhere through the Internet, using PayPal or other payment service companies, and employing increasingly advanced and globalized delivery system. Shoppers can access sites easily on their cellphones. Japanese retailers must consider these changes and adapt.

As online cross-border shopping continues to increase, Japanese small and midsized retailers should not miss the opportunity to find a much larger pool of potential consumers outside the country.

The survey called these new global consumer connections, “modern spice routes.” Japanese retailers should join this shift in the consumer market in order to not be left off the new routes and to be part of the global economy.