Why are small Japanese businesses hesitant to utilise cross-border eCommerce?

Japan is the third largest eCommerce market in the world, yet less than 22 percent of Japanese small businesses engage in cross-border eCommerce. Small and medium-sized enterprises make up about 99.7 percent of all companies within Japan but engage in cross-border eCommerce about 10 percent less than the global average.

Despite its tech-savvy population and world-renowned culinary and cultural exports, a large portion of businesses in Japan are choosing not to engage in cross-border e-commerce; that no longer needs to be the case, writes Serkan Toso, founder of byFood.

There are two main reasons why small Japanese businesses are reluctant or unwilling to participate in online business internationally; some even resist eCommerce within Japan. A lack of resources, a language barrier, and ineffective international marketing strategies would make any small business owner think twice before taking the plunge into the global market.

According to the Central Intelligence Agency, English is spoken by 16.5 percent of the world's population and is used as the language of choice for more than 60 percent of all international businesses. Out of 111 countries, Japan ranked 80th in English proficiency globally. The language barrier imposed within global eCommerce can be too daunting of an obstacle for many small businesses. With a lack of resources and budget, reaching a broader range of customers takes work. Without the funds to employ someone to translate, there is no way to create high-quality English content that will appeal to their desired customers. Equally, operations and customer support would need to be available in English, adding to the small businesses' direct costs. These operations include international logistics, such as differentiating shipping codes, dealing with inconsistent customs duties, and many other tasks that may initially discourage small businesses.

Lack of marketing, and general knowledge of marketing styles and appeals for the international market, pose another dilemma for Japanese small businesses. Global marketing requires understanding foreigners' perspectives, the decision-making process, and where they spend their time and money, among other factors. Many small companies in Japan are still utilizing traditional marketing methods, such as print, broadcast, and outdoor advertising. Print newspapers are still widely read, with over 58% of Japanese households having at least one monthly newspaper subscription. Japan consumes print marketing through newspapers 27% more than the global average and 46% more than Americans. With this extreme disconnect, it's easy to see why small businesses still need to catch up in understanding and utilizing international digital marketing strategies.

For small businesses in Japan, the best first step is to find accessible or affordable human resources since jumping into the global eCommerce market isn't easy without English-speaking capabilities. These resources should also be able to take care of the operations, shipping, marketing, and customer support, which must be conducted in English for the broadest possible reach. With Japanese spoken by only 1 percent of the world's population, small businesses must invest in these English resources.

Another critical aspect of global eCommerce is understanding international marketing trends. It is essential to understand what the average global customer is looking for, especially when it has to do with the product. With the right marketing strategies, small businesses can convince their customers to buy a product they didn't know they needed. Live commerce and live-stream shopping have recently become popular on many social media platforms, most notably with small businesses in China. Live commerce is positively impacting many small businesses worldwide that might have otherwise not been able to reach such a broad market. At the same time, live-streaming on social media allows small businesses to connect with international customers through general conversation, answering questions, and being relatable. Marketing products on social media platforms, such as TikTok and Instagram, automatically expand a small business's reach.

Since 2020, the global eCommerce market has seen a considerable spike during the COVID-19 crisis. While the world seems to be returning to normal, trends are projecting a steady increase of small businesses joining the international eCommerce market. With that said, there is a reported increase in interest from Japan's small and medium-sized enterprises to set up and continue to engage in cross-border eCommerce. If small Japanese companies want to continue growing in the future, they will have no choice but to do business outside of Japan.