The paper presents the characteristics and trends of the Internet and e-commerce in Japan. Then it reports the results of a content analysis of the top 50 popular Web sites in the United States and those in Japan to examine cultural differences of how the Web is utilized in each country and to suggest strategies for global e-commerce.
With the ability of the Web to instantaneously reach a global audience, many e-commerce and e-business companies have attempted or are attempting to expand their markets in foreign countries. As the number of Internet users is growing at an exponential rate in various parts of the globe, it is a great opportunity for any company to grab a share of the global market through the Web. Currently 43% of the Internet population is estimated to be non-English-speakers . International Data Corporation estimates that by 2002 non-English-speakers will make up over 50 percent of the Internet population , and about 45 percent of Internet commerce will be conducted outside the United States . Shortly after the turn of the new millennium, English-speaking audiences may no longer dominate the Internet.
Expanding businesses through the Web may not require physically setting up offices in the region or country where the business is attempting to expand its market to. If the business has already developed a Web site in its home country, what it has to do is to translate the site into the target language to cater to the particular foreign market. It sounds easy, but is the literal translation enough to attract people in a different culture and social system?
According to Adam Jones, director of customer programs at SimulTrans, a translation company based in Silicon Valley, there are five basic localization strategies:
The first three strategies involve linguistic translation of Web sites whereas the last two strategies involve cultural translation. The cultural translation goes beyond the linguistic translation and attempts to design a Web site with the consideration of cultural differences between the originated country and the target country.
Localization of an e-commerce site also goes beyond the localization of a mere Web site. It involves more than just files residing on a server; it involves the entire infrastructure necessary for transaction, distribution, and customer services, which is often unique to a specific country and tied to a specific culture. Each country in the world has a distinct social system and culture of its own and nothing cannot be generalized in discussing specific localization strategies for a particular country. Hence, in this paper, the Internet and e-commerce strategies in Japan are examined as a case study of unique cultural e-commerce strategies.
According to the top-level domain survey by the Internet Software Consortium in July 1999, Japan has the second highest number of hosts worldwide (about 2 million hosts), but it ranks only ninth in terms of the number of hosts per capita. According to another survey by the New Media Development Association , 12.9 million people now subscribe to online or Internet services in Japan, excluding those who gain access to the Internet through schools and employers, and about 27 percent of them are women.
Most Internet users in Japan are very conscious of the time spent online as the dominant telephone carrier, NTT, still charges per-minute telephone fees. Over 20% of Japanese homes use ISDN lines , but ISDN lines are also charged per minute of use.
Approximately 85 percent go online at least once a day and 64.6 percent of those Japanese Internet users have had some experience of buying online . The most popular goods for online shoppers are computer-related products, purchased by 55.6% of those who shopped online at least once. Clothing was ranked the number one item that non-Internet users want to buy in the future when they get Internet access . The average user shopped online 3.76 times per year  and spent 35,000 yen per year .
In 1998 business-to-consumer trade accounted for 0.02 percent (8,685 billion yen) of the total household expenditure in Japan. However, it is expected to rise to 71,160 billion yen in revenue by 2003 according to a survey by the International Trade and Industry Ministry and Andersen Consulting. Andersen estimated that business-to-consumer e-commerce in Japan was four to five years behind the United States, but the gap would close to three years by 2003 .
As e-commerce is multi-dimensional, it may not be fair to estimate how many years Japan is lagging behind based on the U.S. e-commerce model. In one aspect, non-PC Internet connections, Japan is ahead of the United States. Because in Japan many businessmen/women and students have to commute every day and spend a number of hours in public transportation, mobile communication devices such as a personal handyphone system (PHS), cellular phones, and pagers are very popular and come in a wide variety. NTT Mobile Communications Network, Japan's leading mobile phone operator, and its competitors, Nippon IDO Tsushin and DDI Cellular Group, are already offering mobile data services ranging from home banking and news headlines to restaurant guides and weather reports. With their tiny cellular handsets, users can also send/receive e-mail messages and develop their own home pages.
Another very unique aspect of e-commerce in Japan is the role "conbinis" (convenience stores) play in promoting e-commerce among consumers in Japan. Conbinis in Japan offer much more than convenience stores in the United States do. They are ubiquitous and have become a part of everyday life in Japan. There are more than 50,000 conbinis in Japan and those conbini chains have sophisticated computer and distribution expertise . In Japan where the use of credit cards is not as common as in the United States and people are still wary of using credit cards for online shopping, those conbinis could fill the gap between the consumers and the online retailers and play a key role in e-commerce. The conbinis are vying to be the place consumers can go to pay in cash for the merchandise they order online.
Conbinis can also play an important role in the distribution of goods ordered online for those people who are not home during the day as, unlike in the United States, Japanese parcel delivery services will not leave packages unattended in front of doors. Picking up ordered goods at a conbini is beneficial not only to consumers but also to online retailers as consolidating package deliveries at central locations significantly reduces cost .Furthermore, for those people who don't have Internet access at home, the conbinis are installing online shopping terminals right in the store so that people can shop online at the terminals and pay immediately at the register.
Lawson, the second largest conbini chain after 7-Eleven, has installed online shopping terminals called Loppi in each of its 7,200 outlets . Shoppers in a Lawson store sign on to the Loppi terminal to make reservations for a variety of products and services and receive a paper receipt. Then they take the receipt to the cash register to pay for their purchase. Actual products will be delivered to the store a few days later for the customers to pick up, or will be delivered to the customer's home .
7-Eleven Japan Co., the largest conbini chain, has been teaming up with Softbank to sell books, CDs, and videos online. It also announced in January 2000 that it would join with NEC, Nomura Research, Sony Corp., and others to form a "Japanese-style e-commerce" venture, called 7dream.com . Like Lawson's Loppi, 7-Eleven plans to install online multimedia terminals in all 8,000 7-Eleven stores in Japan by June 2001 in addition to launching its Web site that will offer travel-related services, music CDs, ticket sales, books, rental car reservation services, and other goods and services.
Though it is still in a nascent state, an e-commerce model that is unique and different from that of the United States is emerging in Japan. Though the Internet was started in the United States and at the beginning Japanese people were just imitating what Americans were doing with the Internet, gradually Japan has been adopting the Internet into its existing culture and creating unique business models that work better in Japan.
Examining the Internet and e-commerce in Japan as a case study of cultural differences from those in the United States, the following sections will present the results of a content analysis of the top 50 most visited Web sites in each country. The purpose of the content analysis is to examine differences in their content strategies, design schemes, cultural concerns, and e-commerce strategies, and to suggest strategies for e-commerce/e-business targeting a Japanese audience.
A content analysis was conducted on the top 50 Web sites in the United States and in Japan in November 1999. The top 50 most visited U.S. Web sites were selected based on Media Metrix's top domain ranking (see Appendix 1), and the top 50 most visited Web sites among Japanese were selected based on Nikkei BP Internet ranking (see Appendix 2). As for the Nikkei BP Internet ranking, there are two rankings listed: home access and business access, and the home access ranking was used in this study assuming that home users are more likely to be the target audience of e-commerce sites than office users.
The total of 100 Web sites (i.e., 50 U.S. sites and 50 Japanese sites) were coded according to the following categorization:
A portal is a Web site that "is or proposes to be a major starting site for users when they get connected to the Web or that users tend to visit as an anchor site". Typical services offered by portal sites include a directory of Web sites, a facility to search for other sites, news, weather information, e-mail, stock quotes, phone and map information, and sometimes a community forum . There are two different types of portals: general portals, serving the general public, and specialized portals, serving a niche market. Because in this study only the most visited sites were coded and the likelihood of specialized portals entering into the picture was slim, the classification of either a general portal or a specialized portal was not used in coding.
An ISP site is a Web site of an Internet service provider (ISP) dedicated to providing support information for its customers. Many portals have been started by ISPs, but the difference between a portal and an ISP site is that the information contained in an ISP site is limited to its customer support information, such as access point information and system down announcements, while a portal offers much other information and links to other sites in different categories.
A shopping site is a Web site where consumers can purchase goods online. Different payment systems were expected to be seen especially in Japanese e-commerce sites and the payment options were also coded among the shopping sites. Various payment options are credit card payment, personal check/money order payment, electronic money, direct deposit from either a bank or a post office (in Japan), payment through the ISP (meaning that the purchase charge is made to the ISP's billing system and the customer will receive one integrated bill for his/her online purchases along with the monthly service bill from the ISP), cash-on-delivery (COD), registered cash mail (available only in Japan), and payment at the nearest convenience store (available only in Japan).
A service site is a Web site that provides services (e.g., wallet services, e-mail services, sending cards, Web page building/hosting, points earning for free rewards) to consumers or business customers. This type of site may offer services for free -- primarily to obtain user data or to expose users to advertisements -- or for a fee.
A content site is a Web site that provides specific information (up-to-the-minute news, weather information, entertainment, etc.) to users. This type of site can be subscriber-based or open to the public and is usually advertiser-supported.
A corporate site is a Web site of a bricks-and-mortar company that sells goods and services to consumers. The primary function of this type of Web site is customer support instead of selling goods and services online.
A Web site targeting a general audience does not usually require any membership registration and allows anybody to access any section of its Web site. This type of site is likely to be supported by advertisers or by revenues from online transactions.
A Web site targeting members may allow anybody to access a certain section of the Web site (usually its front page), but only those who signed up for the membership, which is either free or fee-based, receive full benefits from the Web site.
The number of advertisements (including banner ads and icon ads, but excluding any promotional materials of the company itself) on the front page of a Web site is counted regardless of the size of the advertisements.
In addition to categorizing those individual sites, comparisons were made between a U.S. site and its Japanese counterpart if the U.S. Web site has the localized site in Japanese. There are five such cases: Yahoo.com and Yahoo Japan, Geocities.com and Geocities Japan, Infoseek/Go.com and Infoseek Japan, Lycos.com and Lycos Japan, and Excite.com and Excite Japan.
Among the 50 popular U.S. Web sites, 20 of them are portals (40%), 10 are service sites (20%), 9 are shopping sites (18%), 7 are content sites (14%), 3 are corporate sites (6%), and 1 is an ISP site (2%). (See Figure 1 below.)
Among the 47 popular sites among Japanese Internet users (because three sites listed in the NikkeiBP November 1999 top Web sites, www.nifty.ne.jp, www.infoweb.ne.jp, and www.nifty.com were merged into www.nifty.com, two sites were extracted from the list; and one site, www.dti.ne.jp, could not be reached), 19 of them are portals (40.4%), 17 are ISP sites (36.2%), 5 are content sites (10.6%), 3 are shopping sites (6.4%), 2 are corporate sites (4.3%), and 1 is a service site (2.1%). (See Figure 2 below.) Of the 47 sites, 5 sites are seen in the U.S. top 50 sites (i.e., Microsoft.com, msn.com, netscape.com, geocities.com, and real.com).
In both the United States and Japan, portals are the most popular type of sites (This should be no surprise as by definition portals should be the sites that attract most people) and approximately 40% of the top Web sites are portals. However, there is a notable difference in the second popular Web site category between the United States and Japan. In the United States the second popular Web site category is service sites that offer free or fee-based services to their users. The examples of service sites in the United States are Passport.com, which offers free services that make online shopping faster and easier; Hotmail.com, which offers free e-mail accounts to its members; and Bluemountainarts.com, which offers free electronic greeting card sending services. On the other hand, in Japan such service sites are not yet popular (only 1 of 47 is categorized as a service site) and the second popular Web category is ISP.
The difference can be attributed to the fact that Internet users in Japan are rather newer to the Internet than are U.S. users and they have not realized the full potential of what the Internet can offer. Japanese users are still at the novice stage of getting connected to the Internet via ISPs and their ISPs' customer supports are their major concern. Another reason would be that those Internet users in Japan might not go beyond the initial start page of their ISPs that was set as the default home page of the browser when they got the software from their ISPs, or many might not know how to change the default home page yet.
Most Japanese portals are the ones evolved out of former "pasokon tsushin" [personal computer communications], equivalent to pre-Internet-era online services in the United States such as America Online and CompuServe. The two most popular sites in Japan following Yahoo Japan and Microsoft Corp. are Nifty Serve and Biglobe, both of which are former "pasokon tsushin" services offered by Nifty Corp. and NEC respectively. The combined number of members reached approximately 5.5 million in June 1999 , which accounts for more than 40% of all Internet users in Japan. Other popular sites are ISP sites such as Fujitsu's InfoWeb (which merged with Nifty-serve and became @nifty) and Sony's So-net. In 1999, InfoWeb had 673,000 members and So-net had 650,000 members .Those numbers are rather small compared with those of Nifty Serve and Biglobe which have over 2.7 million members each.
The Web sites were also coded in terms of whether they require membership registration to receive the full benefit of the site or not. In the United States, the majority of Web sites (64%) do not require any membership; 28% of them require free membership registration; and 8% require a fee-based membership. On the other hand, in Japan the majority of the sites (61.7%) require a fee-based membership; 31.9% require no membership registration; and only 6.4% offer a free membership. (See Figure 3 & 4 below.)
From the e-commerce point of view, this is a remarkable difference that reflects the two different Web cultures. In the United States, purchasing goods/services online using a credit card is the most prevalent method; anybody can visit an e-commerce site and purchase goods/services online using his/her credit card. On the other hand, in Japan credit cards are not yet commonly used and people are wary of using a credit card online; most e-commerce sites in Japan use direct deposit payment from the bank specified by a customer. In order for the direct deposit payment system to work, the site has to know each customer's bank account. For this reason, an e-commerce site is usually for the members of particular online service providers such as Niftyserve and Biglobe and only members can purchase goods and services offered by the site. Then, the online retailers or service providers can charge the prices and fees to the member's bank account directly.
The payment options being offered by online shopping sites in the United States and in Japan were examined. Most U.S. shopping sites offer only credit card payment either online or off-line (meaning a customer has to call a telephone number to provide his/her credit card number or fax his/her credit card information to a fax number).On the other hand, the most common method of payment in Japanese online shopping sites is COD, cash payment upon the delivery/receipt of ordered goods.
COD works only for tangible goods that need to be physically delivered to the customer's home. Vector, a shopping site of downloadable computer software, sells all its goods (i.e., computer software) online. Thus, the payment options they offer are credit card payment (the default); payment at the nearest store of 11 conbini chains, including 7-Eleven, Lawson, Family Mart, Circle K, Thanks, Mini Stop, am/pm, Three F, Popura, CoCo Store, and SaveOn (not all the goods offer this option of payment); debit card payment; and SET (secure electric transaction). In order to use SET as the payment method on the Japanese site, a shopper has to apply for a credit card first to either DC or SAISON (these are the only companies that currently deal with SET); then the person will receive computer software called a "wallet." After a user installs the "wallet" software, he/she can make transaction online using the SET method.
Some major online service providers in Japan such as Nifty Serve and So-net adopted the system by which members can shop online conveniently without providing credit card numbers or setting up a direct deposit to the bank specified by the retailer. Members who choose the members-only payment option will pay for the goods/services ordered online through the regular monthly bill of the service provider.
In the United States' popular Web sites, the average number of ads appearing on the front page was 1.3, while in Japanese sites the number was slightly higher, 1.6. Overall, the number of ads was fewer than originally expected. This might be due to the fact that the only the ads that appear on the front page of each site were counted though many ads were placed on subsequent pages.
Among the 50 popular U.S. sites, only two sites (i.e., Warner Brothers and Buy.com) carry more than five ads. On the other hand, among the 47 Japanese popular sites, six sites carry more than five ads. In both U.S. and Japanese sites overall, a banner ad is used sparingly, and if a site carries more than two ads, the size of the ads tends to be smaller (1.5" x 0.5").
Five pairs of sites: Yahoo.com and Yahoo Japan, Geocities.com and Geocities Japan, Infoseek/Go.com and Infoseek Japan, Lycos.com and Lycos Japan, and Excite.com and Excite Japan, were closely examined to decipher their localization strategies. All of the sites mentioned above are sites that were originally started in the United States and then localized to attract Japanese users. Little difference between those pairs of sites was found in terms of their layout, design, and content categorization. Of course, the actual contents were different to cater to the different national audience.
The Internet, which was originally started in the United States as a tool for researchers to share their data and resources and to collaborate on projects, now has matured into a global infrastructure of communication and businesses. Japan, which a few years ago lagged far behind the United States in terms of adoption of Internet technology, is rapidly catching up with the United States. Furthermore, e-commerce models that are unique to Japan are emerging, though the success of such models is yet to be seen. This paper examined Japanese e-commerce in comparison with that of the United States. Though the Internet has been dominated by Americans, more and more people outside the United States are being connected to the Internet. It will be interesting to see how companies in other countries are or will be adopting their own unique models of e-commerce. Now that the Internet has become more than a tool of global communication and become the place to conduct global businesses, a global e-commerce company cannot ignore the culture, custom, and societal system of the country to which the company is expanding its business. Localization of an e-commerce site involves not only language translation but also adoption of local cultures and social systems. A company that is aware of such differences and serves customers with different needs will thrive in the 21st century.
Media Metrix Top 50 U.S. Domain Ranking in November 1999 (http://www.mediametrix.com/TopRankings/TopRankings.html)
|18||AltaVista Search Services||9,636|
|20||Snap.com Search & Services||9,121|
|37||Warner Bros. Online||4,913|
Nikkei BP Top 50 Domain Ranking for Japanese Home Internet Users in November 1999 (http://audit.nikkeibp.co.jp/audit/release/9911/m1home.htm)
|Ranking||Domain||Reach||Sessions per User||Page Views per User||Page Views per Session||View Times per User (min)||View Times per Session (min)||View Times per Page (sec)|