Despite economic uncertainty making consumers hesitant to spend big, gift-giving remains an important practice in Japan.
And a growing number of people are turning their eyes to social networking services offering smaller presents that, while inexpensive, still let recipients know they are appreciated.
As social media and messaging apps have become integral to communication among friends, family and colleagues in Japan, especially among those in their 20s and 30s, they have also become an increasingly popular avenue for sending gifts.
Senders of e-gifts, which include vouchers for a cup of coffee, ice cream and half a dozen doughnuts, can ditch the wrapping paper and delivery slips, completing the entire selection and payment process on their smartphones.
“When it comes to e-gifts, speed matters,” said Mutsumi Ota, chief executive officer at giftee Inc., a startup that offers a “social gifting” service. “It’s critical that you can send a gift whenever you want and without hassle.”
Designed to send small “thank you” gifts at a reasonable price, giftee enables its users to send an online gift voucher via email or messaging app with a barcode that the recipient can use to buy items at an actual store.
“You’d expect to get a gift on your birthday or anniversary. But e-gifts can be delivered anytime, which can make the gift more impactful for the recipient,” said Ota in a recent interview. He founded the startup in 2010 after leaving a foreign consulting firm.
In the first few years after the 2011 debut of its online service, giftee, the leading service company of its kind in Japan, struggled to popularize the idea of e-gifts and tried expanding its lineup. The number of users has grown rapidly since the launch of its apps for Apple Inc.’s iPhone in 2015 and Android smartphones earlier this year, with more than half a million users as of October.
The 31-year-old CEO believes such casual gifts can help people maintain or deepen interpersonal relationships in a time of increased connectivity. Casual gifts can be sent for any occasion, such as when a boss wants to thank colleagues for their hard work.
The company said the average price for its gifts, which range from ¥100 to over ¥20,000, is ¥600 ($5.40). Roughly 70 percent of customers are women. The product range includes coffee, doughnuts, ramen noodles and flowers, as well as relaxation massage services offered by participating firms. Major convenience store operator Lawson Inc. and Starbucks Coffee Japan Ltd. are among those offering the service, according to giftee.
As quick payments hold the key, the gift-sending app is now compatible with Apple Pay, Apple’s digital payment system that debuted in Japan in late October.
“People appear willing to pay up to ¥2,000 or so to send a gift on giftee,” Ota said, based on his company’s survey. “If it’s a gift that costs over ¥5,000, for instance, some want to give it in person to see how the recipient reacts.”
One of the benefits for participating companies is that it encourages recipients to visit their stores, adding the potential for extra sales at a time when private consumption remains sluggish, despite years of attempts by the government of Prime Minister Shinzo Abe to beat deflation.
Japan’s gift market grew 2.2 percent to ¥9.95 trillion in 2015, but the expansion was largely led by casual gifts, as more formal and traditional ones increasingly lost favor, according to Yano Research Institute.
The private research institute expects the Japanese market for e-gifts to reach ¥111 billion in fiscal 2020, sharply up from around ¥8.2 billion in fiscal 2014. But the domestic e-gift market still lags behind those of the United States and South Korea, according to market analysts.
The industry faces challenges in broadening its appeal. Its current core market is users in their 20s and 30s who, while accustomed to online payments, are seen as fickle and sensitive to new trends. Meanwhile, the lineup of e-gifts is still limited, critics say.
Ota hopes his company will go public in 2018 or 2019, expanding its business reach beyond Japan. He now sees “community currencies” as a new growth area.
The Tokyo-based firm has been partnering with five cities and towns on remote islands in southwestern Japan, which are trying out a new approach to drawing domestic customers and foreign visitors from South Korea, China and Taiwan.
The group in Nagasaki Prefecture decided to go paperless and started issuing digital community currencies — gift certificates with bonuses that can be used at around 1,000 shops and hotels on the islands — in what they say is the first such trial in Japan.
“It used to take a while to get data on where money was spent,” said Yoshinobu Eguchi, an official with the Shima Toku currency issuance committee. “Now we can cut issuance and other costs and quickly analyze where visitors went and shopped to improve our marketing.”
Giftee’s Ota hopes the digital community currency system will be adopted in other regional areas in Japan to rejuvenate local economies and hopefully be taken overseas.
“I want to link the physical world with that of the internet as a business and improve people’s lives,” Ota said.
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