Interview Synopsis

Amazon – Japan growth strategies

  • Public Equity
  • Consumer
  • North America

Amazon, one of the world’s largest retailers, continues to dominate e-commerce. In order to understand its performance in Japan, Third Bridge discussed the company’s strategy and operations with a former sales manager from the company.

Retail giant Amazon is the go-to for online shoppers in Japan

When looking at what categories are performing well for Amazon, the specialist points to consumables and digital devices. He also highlights the company’s strongest competitive advantage: “Japanese consumers, who like to buy online, they come to Amazon first.” It is believed that customers prioritise Amazon owing to its product information, including price comparison and reviews from other customers.

The conversation moved to Amazon’s grocery services, with it being noted that fresh food is not included in this category in Japan. Amazon sells private brands and its own offerings such as Happy Belly – it also focuses “on high-demand products which they can sell inexpensively compared with their other competitive products.”

Amazon moved into selling fresh food in Japan about 4-5 years ago. However, there has been a mixed consumer response to buying groceries online. Although older consumers generally prefer to see and touch produce before purchasing, Japan’s ageing population means there’s also an abundance of elderly people who cannot physically make it to supermarkets.

There have been concerns that Japan’s weakening economic situation could affect average order value (AOV) for e-commerce companies. One way for Amazon to counter this could be through increasing the number of Prime customers, as there is a “huge difference” in their AOV compared with non-Prime customers. Amazon can also bolster AOV through cross-selling, for instance recommending products like shampoo to people buying hair dryers, and focusing on larger products such as washing machines.

Rakuten is one of Amazon’s main rivals in Japan – and each company has their strong points. Amazon offers other services on top of e-commerce, such as music, video and e-books, as well as same-day delivery and free shipping. However, Ratuken boasts a strong points programme and offers more detail on its products, but Amazon’s search and payment functions surpass that of Rakuten. 

To access all the human insights from Third Bridge’s Amazon – Japan Growth Strategies Interview, click below to view the full transcript.

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The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.

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