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RealTime IT News

Japan's E-Commerce Market Holding Firm (For Now)

A study undertaken by the Japan Development Bank has found that although the overall scope of electronic commerce is healthy in Japan, there is still a great deal of improvement necessary for further growth.

In the business to consumer sector, it documented--in conjunction with the Ministry of Posts and Telecommunications--that Japan had rung-up a total of 82 billion yen ($695 million) in online sales for fiscal 1997. This represents 4 percent of all mail-order sales, but only a meager 0.1 percent of all sales. Sales primarily concentrated in the areas of computer products and software, books, and airline tickets.

Two of the major online players are Japan is Two Top, an online computer sales business generating annual sales of 40 billion yen ($330 million) and Kinokuniya Book Web, an online Japanese bookseller that maintains annual sales of 700 million yen ($6 million). Their success is in part due to assuming control of distribution and lowering costs.

But while these two companies have firmly secured their positions in the world of Japanese e-commerce, there are still a number of issues to be resolved before e-commerce becomes an everyday experience for the Japanese consumer.

In a separate study by Fujii Akimitsu, deputy director of the Hiroshima branch of the Japan Development Bank, he noted that consumer confidence of the Internet is low, security is still not guaranteed, shipping costs in Japan are too high, and data transmission speeds are too slow.

"Consumers are not confident because the product they see online is not what it seems when it is delivered to them," said Akimitsu. "For example when buying clothes online, because the images are transferred so slowly, consumers are unsure of colors which leaves them disappointed when it arrives. And then of course by then, they have paid the high cost of shipping."

In response to some of these outstanding issues, Nippon Telegraph and Telephone Corp. (NTT) is approaching Microsoft about implementing Microsoft Site Server 3.0, Commerce Edition software, at an estimated cost per business of 2-3 million yen. Another option is electronic money--VISA cash--already in place at 800 shops in Shibuya, Tokyo and NTT super cash, with 100,000 cards to be distributed in Shinjuku, Tokyo, in April of 1999.

Micro payment is also being considered. Yen payments of 0.3-0.5 yen would be made each time a Web screen is viewed.

"This is all talk for the future, but is hoped that this will be advantageous for users," added Akimitsu.