E-Commerce Slowly Making Strides in Japan

Despite the fact that e-commerce is still in its infancy, the promise of business conducted via the Internet in Japan is looking up, according to Neil Van Wouw, Chief Technology Director for Global Online, a 4-year-old, first-tier Internet provider with around 15,000 dial-up customers.

“Japan is number two in the world in total users online, registering somewhere in the neighborhood of 10-12 million people. The potential of growth is of course there, but in terms of growth like we have seen in the U.S., e-commerce is still in its infancy.”

Electronic commerce is slow to develop largely because of the continuing conservative outlook among credit card companies and banks, and the slow deregulation procedures taking place in the telecommunications industry.

For credit card companies, SSL (secure socket layer) protocol has yet to be uniformly adopted for the Internet in Japan, resulting in a variety of methods and solutions, but ultimately hampering the growth of e-commerce.

“In fact we are one of the few businesses in Japan that offer real-time credit card signups,” Van Wouw added.

Currently banks are reluctant to back any venture where credit card security has not been agreed upon, or are fearful of the poor economic climate that currently affects Japan.

“But with the recent pressure on banks, there could be sudden changes,” said Van Wouw.

The telecommunications industry is also moving slowly forward, with international telephone companies pressuring MITI (Ministry of International Trade and Industry) for access to the local market, or awaiting pending decisions on partnerships with domestically based Japanese telephone carriers.

Such was the case with Japan’s KDD, formerly an international phone service, now allowed to operate in the domestic market as another alternative to the long distance dominance once held entirely by NTT–Japan’s version of Ma Bell.

“As more and more changes are taking place in the telecommunications industry, the pace of Internet use and e-commerce should pick up,” noted Van Wouw. “Some people say that Japan is 1-2 years behind the U.S., while others point out a more extreme version at 5 years or more. Time is not a factor. Once a trend catches on, growth in the Internet and e-commerce could be as fast as it has been in the U.S.”

As it stands now, some of the more prominent e-commerce in Japan is taking place among the country’s larger banks such as Sumitomo and Tokai, while online transactions are in the planning stages for Citibank, Japan.

“What you have in Japan is a lot of talk of people doing things, developing ideas, moving forward with plans, etc. More of this ‘talk’ needs to be translated into action. Change will come faster then.”

Global Online operates on a direct international bandwidth, is the only ISP in the country with services in both English and Japanese, and also creates personal and business home pages in its Web contents division, NVision.

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