Japanese department stores and retailers across Asia are getting into the act as they expand their online presence to fill in the gaps of the country’s online marketplaces.
The move to add e-commerce to the mix has raised hopes for the region, which relies on foreign direct investment for much of its revenue.
While online retail is booming in China, India, South Korea, and Southeast Asia, it is proving less attractive to overseas shoppers in Asia.
“The Japanese e-tailers are trying to get in and it’s not easy,” said Vijay Sharma, senior vice president of e-retail at global retail consulting firm McKinsey.
“They have to have an understanding of how the market is changing, and how to differentiate themselves.”
With the arrival of the e-banking and loyalty program, the number of Chinese online shoppers will grow.
China has more than 3 billion people and a growing number of them have online accounts.
The country has been grappling with the challenges of attracting the growing number of online shoppers as it struggles with a slowdown in its economy.
In February, Chinese President Xi Jinping announced a massive economic stimulus package that will boost domestic investment and increase the countrys GDP to 4 trillion yuan ($78 billion).
The Chinese government says the stimulus package will help China to “rebalance its economy and build the capacity of the economy.”
In March, China announced plans to open the country to foreign direct investments, which will boost its economy by at least 7% this year and 6% next year.
“We are seeing a significant shift of the market to online shopping,” said Shashi Verma, a partner at McKinsey’s China and Asia business unit.
However, the Japanese ecommerce companies are not the only ones that are taking notice.
“As the number and pace of new customers in China increases, the Chinese e-market is likely to be more active in the future,” said Sharma.
In India, the government is investing in e-services like e-shopping and e-wallets, which offer digital shopping that is free of the traditional brick-and-mortar stores.
These e-shop and ecommerce platforms allow online shoppers to shop for and buy items from brands like Amazon, Apple, Walmart, and more, while their physical counterparts can only buy items that are in stock or at specific retailers.
While these online retailers have been able to quickly build out their customer base, they have not been able in the past to make use of the platform’s online shopping capabilities to boost their revenue.
“In India it has been quite slow in the online shopping space,” said Verma.
“And there is no way of making money from this.
So, the big question is, how do they expand to the offline market?”
“In Asia, there is a lot of opportunity to be made by the ecommerce platform,” Sharma said.
“It is a very mature market.”
The Japanese companies have seen an opportunity in India as they have an existing presence in the country.
“We are doing a lot in India.
We have had a very good relationship with the government and the eCommerce regulator,” said Masashi Sato, chief marketing officer of Shashi.
Sharma said the Japanese companies are in talks with other Japanese eCommerce companies, including the Japanese-owned e-bay.
India has also become a hotbed of online shopping, with a number of ecommerce services available for both offline and online shoppers.
“It’s very interesting,” said Sato.
“India has been looking at e-stores as a potential growth area.”
The online shopping market is also getting an infusion of Chinese capital.
The Chinese government announced a plan to invest in e-commerce startups in 2015, which has led to the expansion of Chinese ecommerce businesses in India, including e-buyer e-charts and eBargain.com.
A Chinese eCommerce startup called Zendesk, which specializes in online shopping and eCommerce, has been valued at $300 million.
At least two Japanese companies, Rakuten and Mobeo, have been expanding their online shopping businesses, with Rakuten hiring 15 people in 2015 and Mabeo hiring a few hundred people in 2016.
According to the National Bureau of Economic Research, online shopping accounts for about half of all commerce in India and is expected to account for 40% of the Indian retail market by 2020.