Rakuten, Amazon and PayPay Mall

Japan is the world’s third-largest economy and the fourth-largest ecommerce market, with sales of $115 billion. But online retail accounts for only 10% of total retail sales in Japan, so there is a lot of room for growth.

Japan is a technologically advanced country, with a high penetration of internet use and smartphones. But it is also deeply conservative and has a unique culture. That extends to Japanese online shopping preferences, such as product pages packed with dense information, which can be difficult for westerners to understand.

In this article we look at the largest online marketplaces in Japan, where the ecommerce landscape is dominated by just three companies.

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The largest online marketplaces in Japan

PayPay Mall is definitively the most popular marketplace in Japan with over two billion monthly visits. Amazon and Rakuten are well behind, but fairly equal with each other having approximately 500 million monthly visits each.

Overall, online marketplaces, rather than conventional online stores, dominate ecommerce in Japan. A survey of Japanese consumers by the Ecommerce Foundation found that 39% had bought from an online marketplace in the last month.

However, only 10.2% of Japanese consumers have bought from overseas websites, compared with US cross-border shopping at 54%. This is reflected in only three online marketplaces having more than one million monthly visits from Japan, and the complete absence of popular global sites such as eBay or Etsy.

We did register small amounts of traffic from Japan to homewares marketplace Houzz (209,000 monthly visits), cross-border marketplace Fruugo (136,000) and eBay (81,000). These are minuscule traffic levels compared to PayPay Mall, Rakuten and Amazon.

Marketplace sales data is not consistently reported by these companies, and a country-by-country breakdown is not included in their public accounts. But some sources estimate that Rakuten is actually the largest online marketplace in Japan by sales revenue.

PayPay Mall in Japan

PayPay Mall

PayPay Mall is not only the largest online marketplace in Japan, but also the world’s second-largest online marketplace by traffic overall. Only Amazon generates more worldwide visits per month.

PayPay Mall was launched by Yahoo! Japan in October 2019, building on payment app PayPay which was launched in June 2018. PayPay is modeled on the success of Alibaba in China, which has a close connection between Alipay (payment app) and Tmall (online marketplace).

Many people in the western world think that Yahoo! disappeared years ago, but Yahoo! Japan has always been a separate venture. While Yahoo! declined in the US and was finally sold to Verizon in 2017, Yahoo! Japan established a leading position in the country and found great ecommerce success with Yahoo! Shopping.

In recent years, Yahoo! Shopping fell far behind Rakuten and Amazon in the Japanese ecommerce market. The PayPay system is how they intend to win customers back – the traffic volumes we are seeing suggest that the strategy is working!

Yahoo! Shopping remains in operation, but PayPay Mall is where Yahoo! is now concentrating most of its resources.

PayPay Mall is not easy to access for businesses outside Japan, requiring that they either set up a local company or work with a local service provider or agency.

Rakuten in Japan

Rakuten

Rakuten is a far-reaching internet company in Japan, providing banking, credit cards, ecommerce, content and communications services. Its online marketplace, Rakuten Ichiba, has 49,000 merchants, 115 million customers and sales of $37 billion in 2019. Although PayPay Mall has higher visitor numbers, some sources place Rakuten as the market leader by sales.

Rakuten Ichiba began life in 1997 and is a pure third-party marketplace. Rakuten does not compete with its sellers on the Ichiba website. The site itself has a distinctive busy design, with dense text and images, far from the minimal layouts that are popular in the west.

The marketplace is seller-driven, providing store owners with full control over how their products are presented and sold. The result is a more varied buying experience than on sites like Amazon. A very wide variety of products are available on Ichiba, with food, home products, and apparel being the most popular categories.

Businesses who want to sell on Rakuten Ichiba must have a company registered in either the United States or Japan. Others will need to use a service partner to apply on their behalf. Merchants are rigorously vetted and retailers need to prove the authenticity of branded products by providing commercial invoices.

Amazon in Japan

Amazon

Amazon expanded to Japan in the year 2000, and it is now their second-largest market, providing 10% of Amazon’s global online traffic. Japan was Amazon’s fourth foreign marketplace, after the UK, Germany and France.

Looking at market share, Amazon had a 23% share of Japan’s online retail market in 2017, according to Euromonitor, compared with Rakuten’s 18.5%. Other sources differ, showing the two companies neck-and-neck.

Conversely, a survey by NTTCom Research found that shoppers on Amazon Japan had relatively low monthly spending, mostly on books, magazines, DVDs and video games. It also found weak penetration of Prime membership, at 16.6% of Amazon shoppers in Japan compared to 65% in the US.

Amazon continues to compete hard in Japan, investing in same-day delivery and drawing the attention of the authorities over its pricing practices. The Amazon website has the same design in Japan as the rest of the world, in contrast to the cluttered layouts to be found on PayPay Mall and Rakuten Ichiba.

Amazon Japan is much more accessible to foreign sellers than PayPay Mall or Rakuten Ichiba, and is often the first choice for businesses expanding to Japan. Listings must be translated and customer support must be provided in Japanese, but there are several agencies who can help with those requirements and Seller Central provides a familiar interface for managing sales.

About the data

This article covers three online marketplaces (either pure-play marketplaces or retailers with a third-party marketplace) with more than one million monthly visits from Japan, based on data from SimilarWeb. A global list of online marketplaces, based on the same data, is available in The World’s Top Online Marketplaces.

We have excluded online retailers whose marketplace forms a very small part of their overall business, as well as marketplaces with a consumer-to-consumer model, and marketplaces with a very narrow product niche.

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Online Marketplaces in Japan: Rakuten, Amazon and PayPay Mall