In this age when anyone can easily open an online store, more and more people are opening online stores not only for the domestic market, but also for the overseas market. Many people who are currently opening online stores for the domestic market may be interested in opening online stores targeting overseas markets.
In this article, we will introduce the advantages and disadvantages that those considering opening an online store for overseas customers should be aware of. We will also introduce how to open a business and the preparations necessary to open a business, so please take a look if you are considering or interested in opening a business.
Overseas Online E-Commerce Store Market
The size of Japan’s domestic BtoC Internet store market in FY2021 was 20.695 trillion yen, according to the Ministry of Economy, Trade and Industry. Meanwhile, the size of Japan’s cross-border EC market totaled 372.7 billion yen, including 36.5 billion yen in purchases from China and 336.2 billion yen from the U.S. (*1)
Incidentally, the scale of the cross-border EC market in China is 2,138.2 billion yen in purchases from Japan and 2,578.3 billion yen in purchases from the U.S., for a total of 4,716.5 billion yen. The scale of the U.S. cross-border EC market is 1,222.4 billion yen for purchases from Japan and 818.5 billion yen for purchases from China, for a total of 2,040.9 billion yen.
Although the scale of the Japanese cross-border EC market is still small compared to the domestic market and the scale of the cross-border EC markets in China and the U.S., it grew 9.10% in FY2021 compared to the previous year. Since the growth rate in FY2021 was 7.6% (*2), we can expect the market to continue to grow in the future.
China and the U.S. have overwhelmingly larger populations than Japan, and there is a high level of recognition of the quality of Japanese products. Products that are in high demand from foreigners, products that are rare overseas, and products that already have some sales in Japan may well be able to gain further business opportunities by selling them through online stores for overseas customers.
Advantages of Opening an Online E-Commerce Store for International Customers
The market for overseas online stores is expected to grow in the future. Here are some advantages of opening an overseas online shop.
Increase in the number of new customers
Opening an online store for overseas markets and expanding your sales channels will give you a chance to acquire new customers. If you can create fans of your products in countries outside of Japan, and if those fans send out information via social networking services, you may be able to increase your customer base even further.
Also, if you create a store account and actively utilize SNS, you can operate an online store while making contacts with customers without spending huge amounts of money on advertising. Even products that are made by individuals as a hobby, such as handmade products, will be able to build a fan base overseas.
Products that are not in high demand in Japan may become popular
Even if a product is not in great demand in Japan, there is a good chance that it will become popular overseas. Japanese anime and otaku culture are highly valued overseas, and many foreigners are interested in Japanese pop culture. There are also collectors who collect antiques such as crafts that remind them of Japanese culture. However, many of these products cannot be purchased without visiting Japan.
In this regard, with an online store for overseas customers, consumers can purchase Japanese products while in their own country. If products that could not be easily purchased in the past can now be easily purchased from overseas via the Internet, sales may explode. Products that Japanese consumers may think will not sell well may unexpectedly become popular products.
Less expensive than opening a physical store overseas
If you try to establish a physical store overseas to sell your products, you will have to pay huge costs for tenant fees, labor, interior construction, equipment, and purchasing. Realistically speaking, it is only major companies with adequate financial resources that can open stores overseas.
However, such costs are not necessary for overseas online stores. Of course, opening and operating an online store requires a certain amount of money, but compared to opening a physical store, the cost can be greatly reduced.
Disadvantages of Opening an Online E-Commerce Store for International Customers
As mentioned in the previous chapter, there are many advantages to opening an online store for overseas customers, but of course there are also disadvantages. To avoid regrets after opening a shop, it is important to understand the disadvantages as well.
Shipping and other costs are high
Compared to domestic online stores, the disadvantage is that you will have to pay for shipping and customs duties. Shipping costs vary depending on the size of the product, and customs duties vary depending on the country of origin and the item being imported. In addition, time and manpower costs for customs clearance and shipping are also involved.
Even if you already have an online store for the domestic market, it is important to understand that you will also have to pay for updating the store to support different languages and currencies, as well as marketing costs.
Differences in culture and manners
There are different cultures and manners overseas than in Japan, and it is difficult to succeed in opening an online store for overseas customers if you ignore these differences. If you develop a business based solely on Japanese sensibilities, it could lead to major problems. You must understand the business customs of the country in which you are developing your online store, and deal with them properly.
In addition, since trends and needs differ from those in Japan, it is necessary to conduct thorough research on the latest local information.
A risk of long-distance shipping
When shipping goods overseas, you will be transporting them over much longer distances than in Japan. It is difficult to expect the same quality in overseas shipping as in Japan, and it is not uncommon for items to be damaged or lost.
Considering the risks of long-distance shipping, you should consider not selling fragile goods, packing them carefully, and purchasing insurance that provides coverage for damage and loss. To avoid problems, you should decide and clearly state what you will do if damage or loss occurs.
Possible cross-border troubles
Cross-border troubles are problems that occur when selling goods across borders. According to the Ministry of Economy, Trade and Industry, 116 cases of troubles between overseas businesses and Japanese consumers were reported in the 11-month period from April 2009 to the end of February 2009. (*6)
These troubles included delivery troubles, troubles related to contract terms, and troubles related to products and services. Although this survey was conducted between overseas businesses and Japanese consumers, it is quite possible that similar problems may occur when Japanese businesses conduct transactions with overseas consumers. If a problem occurs with an overseas consumer, it will take more time and effort to resolve the problem than it would have taken to resolve a problem with a domestic consumer.
How to Open an Online Store for International Customers
There are some disadvantages to opening an online store for overseas customers, but if you can cover the disadvantages, it is likely to become a great business opportunity. Here are two ways to open an online store for overseas customers.
Opening a store in an overseas mall
The first method is to open a store in an overseas mall such as Amazon, eBay, or Tmall Global (TianNeko International). Major overseas malls with a high level of recognition are accessed by millions of people every day, so you do not need to spend much time and money to attract customers. In some cases, products sell immediately after being displayed.
However, opening a store is often more expensive than creating your own independent online store, and the commissions paid to the mall are also higher if your products sell well. When considering opening a store in an overseas mall, decide on the target country and then decide on the overseas mall to open a store in, and check the rules and costs.
Creating an online store that is compatible with overseas markets
Some services that make it easy to create an online store, such as BASE and Shopify, support overseas markets. Traditionally, creating an online store required a lot of skill and expense, but with these services, it is relatively easy to open an online store for overseas customers.
Independent online stores can be more profitable than overseas malls and can be well branded. However, in order to be recognized, you must take measures to attract customers.
Since the functions of online stores that can handle overseas customers differ depending on the service, when using this service, compare the functions and choose the one that is easy to use.
Opening an Overseas-Oriented Online E-Commerce Store
Whether you are opening a store in an overseas mall or creating an online store that is compatible with overseas markets, there are several things you need to prepare for opening your online store. It is important to understand what preparations you may need to make.
Multilingualization
You will need to make the product descriptions and other information in your online store multilingual for overseas buyers. At the same time, the descriptions and displays of the products to be sold must be translated into the local language.
Some overseas malls and online store creation services have a function that allows automatic translation, but the extent to which this is done depends on the mall or service. If the automatic translation results in an unnatural translation, it is likely to lower the trustworthiness of the store, and the customer will lose the desire to purchase.
Be prepared to respond to inquiries in languages other than Japanese in the language of the recipient. Even if a customer is motivated to purchase, if you are unable to respond adequately, you may lose the opportunity to purchase the product. If you are unable to properly respond to complaints or other inquiries after a purchase, you may lose satisfaction, and customers you have acquired may leave your company.
Understanding international laws and customs
Precious metals and jewelry cannot be sold globally. Even if a product is allowed to be sold in Japan, its importation may be prohibited in some countries. In some cases, the ingredients contained in a product may be prohibited for importation, so it is necessary to check the details and understand them thoroughly.
Be very careful to understand the rules of your target country, including embargoed items and related laws, or you may be subject to confiscation or fines.
Accepted payment methods abroad
In order to encourage potential overseas buyers to purchase your products, you will need to introduce payment methods that can be used overseas. In Japan, credit cards are the mainstream, but in some countries, payment services such as Alipay and Paypal are the mainstream.
Researching what payment methods are common in your target countries and introducing them will ensure smooth transactions and avoid damaging sales opportunities.
International shipping options
The method by which you ship your products overseas is also important. In the case of Japan Post, services for sending overseas include EMS, airmail, SAL, and sea mail, each of which takes a different number of days and costs for delivery. Some shipping methods are not supported by certain countries, so it is important to find out which methods are available.
In addition to Japan Post, DHL and FedEx are also available. You must research the number of days and fees required for delivery, decide on the best service, and set the shipping costs accordingly. It is also recommended to prepare several options for consumers to choose from according to their needs and budget.
At the same time, don’t forget to change the input format so that buyers can enter their international addresses and phone numbers.
Conclusion
In order to be successful in opening an online store for overseas customers, it is necessary to understand the advantages and disadvantages and to open the store in a way that is best suited for your company. In addition, you will need to deal with different issues than when opening an online store for the domestic market, so it is important to prepare carefully and make sure that nothing is incomplete.
Even if you go to the trouble of opening an online shop and getting people interested in your products, you will miss an opportunity if you have a system that does not allow overseas consumers to purchase smoothly. In order to create new business opportunities by opening an online store for overseas customers, research your target countries carefully and operate a store that is highly convenient for consumers.