Is Japan’s Online Fashion Retail Market Saturated?

In recent years, the online market is becoming saturated due to Japanese retailers, apparel and designers brands focusing more on e-commerce. Japan’s online retail market sales exceeded 6 trillion 150 billion yen (4.9% increase from the previous year) in fiscal year 2014, largely surpassing supermarket, department store, and convenience store sales and becoming the No.1 market in Japan. There was an increase in online shopping and a decrease in catalog order shares within the market. With the popularity of buying consumer products and everyday goods online, it seems the trend of online shopping is widely penetrating. It is also becoming more and more typical for consumers to buy apparel, shoes, and accessories online, making it unnecessary to go to actual stores. In addition, we have also seen new services like Omni7, the website by Seven & I Holdings, which offers a one-stop shopping experience from department and speciality stores such as Seibu/Sogo, Ito Yokado, Akachan Honpo, and LOFT. This website enables consumers to gain nanaco e-money points, as well as receive and return items at 7-eleven stores.

On the other hand, there have been companies that have been promoting ‘cross-border e-commerce’ and companies that have been improving their online shopping experience. Fast Retailing’s Uniqlo’s sales amount from their e-commerce website is over 30 billion yen and the company has announced plans to expand their online business. Free’s Mart, the brand by Sanei bd (a consolidated subsidiary of the major apparel company TSI Holdings), opened a virtual store within Southeast Asia’s biggest fashion online retail website ZALORA (HQ: Singapore). Their aim being to take initiative in Singapore, Malaysia, and Hong Kong; areas in Southeast Asia that are most fashion-focused and have the highest purchasing desire. In addition to these areas, ZALORA covers Thailand, Vietnam, the Philippines, Australia and Taiwan, and is the well-known throughout Southeast Asia.

Another factor to point out is the benefit of gaining accessibility to Muslim fashion buyers. ZALORA introduced Zalia, a brand focusing on Muslim wear, which has been increasing sales especially in Indonesia where there is a population of 240 million people. When viewed from a global perspective, the Muslim fashion market has great potential with an estimated worth of 322 billion dollars (approx. 32.7 trillion yen) in the year 2018. For Indonesia, the nation with the largest Islamic population, human resources are being put in place to focus on market research, market positioning and the keys to success. Access to information such as website sales and rankings will most likely be beneficial to the brand.

Moving forward, we should see more companies looking to enter regions and countries such as mainland China, Hong Kong, Taiwan and Thailand. Once the Japanese online shopping market matures, we will see a shift in luxury items. With cross-border e-commerce there lies a big opportunity in basic and mass market consumer items.